Mar 31, 2022
1. Corporate Information
Aptech Limited ("The Company") is a public limited company incorporated and domiciled in India and has its registered office at Mumbai. The equity shares of the Company are listed on Bombay Stock Exchange Limited (BSE) and National Stock Exchange (NSE) of India Limited. The Company is primarily engaged in the business of education training and assessment solution services. It is a global learning solutions company that commenced its Education and Training business for the last over three decades.
The financial statements for the year ended March 31, 2022 are approved for issue by the Board of Directors of the Company on May 4, 2022.
2. Significant Accounting Policies
These financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 as amended and notified under Section 133 of the Companies Act, 2013 (the Act'') and other relevant provisions of the Act.
These financial statements are prepared on an accrual basis under the historical cost convention or amortised cost, except for the following material items that have been measured at fair value as required by relevant Ind AS :
⢠Certain financial assets that are measured at fair value;
⢠Net Defined benefit (asset)/liability - fair value of plan assets less present value of defined benefit obligations;
⢠Share Based payments - at fair value
These financial statements are presented in Indian Rupees (INR), which is also the Company''s functional currency and all amounts are rounded off to the nearest lakhs (INR ''00,000) upto two decimals, except when otherwise indicated.
PPE is recognised when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
PPE (other than Freehold land and Capital Work-in-progress) are stated at cost less accumulated depreciation and accumulated impairment losses, if any.
The initial cost of an asset comprises its purchase price, non-refundable purchase taxes and any costs directly attributable to bringing the asset into the location and condition necessary for it to be capable of operating in the manner intended by management.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of item can be measured reliably. The carrying amount of any component accounted for as separate asset is recognised when replaced. All other repairs and maintenance are charged to the Statement of Profit and Loss during the reporting period in which they are incurred.
Freehold land is carried at historical cost less impairment loss, if any.
The carrying amount of an item of PPE is derecognised upon disposal or when no future economic benefit is expected to arise from its continued use. Any gain or loss arising on the derecognition of an item of PPE is determined as the difference between the net disposal proceeds and the carrying amount of the item and is recognised in Statement of Profit and Loss.
PPE which are not ready for intended use on the date of balance sheet are disclosed as capital work-in-progress. It is carried at cost, less any recognised impairment loss. Such properties are classified and capitalised to the appropriate categories of Property, Plant and Equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Depreciation method, Estimated useful lives and residual value
Depreciation on PPE is provided over their estimated useful lives on a straight line basis from the date the same are ready for intended use. Useful life of PPE is in accordance with that prescribed in Schedule II, except in respect of the following items of PPE which is based on technical evaluation:
i. Certain items of plant and machinery (including computers) installed at and used in projects and certain training centers which are depreciated over the number of years till the completion of the period of the contract when the assets are transferred to those parties.
ii. Depreciation on PPE is provided at the following rates based on estimated useful life as per the Act,
Office Premises 60 years
Furniture and Fixtures 5 years
Computers Hardware 3 years
Office Equipment 5 years
Electrical Equipments 10 years
iii. Depreciation on Furniture and Fixtures which are installed at leasehold premises is provided over lease period. On other Furniture and Fixtures, the estimated useful life is considered to be that of 5 years.
iv. Depreciation on PPE added/disposed off during the year is provided on pro-rata basis with reference to the date of addition/disposal.
v. Items of PPE which has cost of '' 5,000 or less are depreciated fully in the year of purchase/ capitalisation.
vi. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, while the effect of any change in estimate is accounted for on a prospective basis.
Intangible assets are recognised only if it is probable that the future economic benefits that are attributable to that asset will flow to the Company and the cost of the item can be measured reliably. Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses, if any. Directly attributable costs, that are capitalised as part of the software include employee costs and an appropriate portion of relevant expenses.
Intangible assets under development: Expenses incurred on in-house development of courseware and products are shown as Intangible asset under development till the asset is ready to use. Their technical feasibility and ability to generate future economic benefits is established in accordance with the requirements of Ind AS 38, "Intangible Assets".
Intangible assets are amortised over their respective individual estimated useful lives on a straight-line basis, from the date they are available for use, as under :
Computer Software and Contents with a finite useful life using the straight-line method over the 3 years from the date they are available for use or based on its consumption pattern, as applicable.
The estimated useful life and amortisation method are reviewed at the end of each reporting period, while the effect of any change in estimate being accounted for on a prospective basis.
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets may have been impaired. If any such indication exists, the recoverable amount, which is the higher of its value in use or its fair value less costs of disposal, of the asset or cash-generating unit, as the case may be, is estimated and impairment loss (if any) is recognised and the carrying amount is reduced to its recoverable amount.
In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
An impairment loss is recognised immediately in the Statement of Profit and Loss. When impairment subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but upto the amount that would have been determined, had no impairment loss been recognised for that asset or cash generating unit. A reversal of an impairment loss is recognised immediately in the Statement of Profit and Loss.
Inventories consists of educational course material valued at the lower of cost or net realisable value. Cost of such material are determined on Weighted Average basis.
Cash and cash equivalents include cash in hand, demand deposits with the bank and other short term highly liquid investments, which are readily convertible into cash and which are subject to an insignificant risk of change in value and have original maturities of three months or less.
Costs and expenses are recognised when incurred and are classified according to their nature.
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the date of grant.
The fair value determined at the grant date of the equity-settled Share Based Payments is expensed on a straight-line basis over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in Statement of Profit and Loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
i. Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the Company has a present obligation (legal or constructive) as a result of past event, it is probable that an outflow of resources will be required to settle the obligation, in respect of
which a reliable estimate can be made of the amount of obligation. Provisions is not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
A Provision is measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. If the effect of the time value of money is material, the amount of provision is discounted using an appropriate pre-tax rate that reflects current market assessments of the time value of money and, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
A Contingent liability is disclosed in case of a present obligation arising from past events, when it is either not probable that an outflow of resources will be required to settle the obligation, or a reliable estimate of the amount cannot be made. A Contingent Liability is also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
A Contingent Asset is not recognised, but disclosed in the financial statements when an inflow of economic benefits is probable.
A liability is recognised for benefits accruing to employees in respect of short-term employee benefits in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service. A liability is recognised for benefits accruing to employees in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by the employees up to the reporting date.
The Company''s contribution to Provident Fund and Employee State Insurance Scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.
In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan ("Gratuity Plan") covering all employees. The Gratuity Plan provides a
lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee''s last drawn salary and the years of employment with the Company. For defined benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each Balance sheet date. Remeasurement, comprising actuarial gains and losses, are recognised in full in the Other Comprehensive Income for the period in which they occur. Remeasurement recognised in Other Comprehensive Income is reflected immediately in retained earnings and is not reclassified to Profit and Loss. Past service cost both vested and non-vested is recognised as an expense at the earlier of (a) when the plan amendment or curtailment occurs; and (b) when the entity recognises related restructuring costs or termination benefits.
The retirement benefit obligations recognised in the Balance sheet represents the present value of the defined benefit obligations reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the scheme.
Compensated Absences
The Company provides for the encashment of absence or absence with pay based on policy of the Company in this regard. The employees are entitled to accumulate such absences subject to certain limits, for the future encashment or absence. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.
Income tax expense represents the sum of the tax
currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profits differ from ''profit before tax'' as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using applicable tax rates that have been enacted or substantively enacted by the end of the reporting period and the provisions of the Income Tax Act, 1961 and other tax laws, as applicable.
Current tax assets and current tax liabilities are offset if there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the current tax liabilities and assets on a net or simultaneous basis.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Company''s financial statements and the corresponding tax bases used in the computation of taxable profit under the Income Tax Act, 1961.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax liabilities are generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax asset to be recovered.
Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT is recognised as deferred tax asset in the Balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised.
Deferred tax assets and deferred tax liabilities are offset if there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets and liabilities relate to the income tax levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the current tax liabilities and assets on a net or simultaneous basis.
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in Other Comprehensive Income or directly in equity, in which case, the current and deferred tax are also recognised in Other Comprehensive Income or directly in equity, respectively.
The basic earnings per share are computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the reporting period. Diluted earnings per share is computed by dividing the net profit attributable to the equity shareholders for the year, as adjusted for the effects of potential dilution of equity shares, by the weighted average number of equity shares and dilutive equity equivalent shares outstanding during the year, except where the results would be anti-dilutive.
m. Foreign Currency Transactions
Transactions in foreign currencies are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary items, if any, that are measured at historical cost denominated in a foreign currency are translated using the exchange rate as at the date of initial transaction. Exchange differences on monetary items are recognised in profit or loss in the period in which they arise.
n. Statement of Cash Flows
Cash flows are reported using the indirect method, whereby net profit for the period is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents include cash on hand, cash at banks, other short-term deposits and highly liquid investments with original maturity of three months or less that are readily convertible into cash and which are subject to an insignificant risk of changes in value, as reduced by bank overdrafts.
o. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the Statement of Profit and Loss.
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income ("FVOCI") or fair value through profit or loss ("FVTPL") on the basis of following:
⢠the entity''s business model for managing the financial assets; and
⢠the contractual cash flow characteristics of the financial assets.
A financial asset shall be classified and measured at amortised cost (based on Effective Interest Rate method), if both of the following conditions are met:
⢠the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and
⢠the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Cash and bank balances, trade receivables, loans and other financial assets of the Company are covered under this category.
b. Fair Value through Other Comprehensive Income
A financial asset shall be classified and measured at FVOCI, if both of the following conditions are met:
⢠the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and
⢠the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
For financial assets that are measured at FVOCI, income by way of interest and dividend is recognised in profit or loss and changes in fair value (other than on account of such income) are recognised in Other Comprehensive Income and accumulated in other equity. On disposal of equity instruments measured at FVOCI, the cumulative gain or loss previously accumulated in other equity is not reclassified to profit or loss on disposal of investments.
The Company has made an irrevocable election to present subsequent changes in the fair value of equity investments not held for trading through FVOCI.
A financial asset shall be classified and measured at FVTPL unless it is measured at amortised cost or at FVOCI.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Financial liabilities are classified as either financial liabilities at FVTPL or ''Other Financial Liabilities''.
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition as FVTPL. Gains or Losses on liabilities held for trading are recognised in the Statement of Profit and Loss.
b. Other Financial Liabilities
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Financial assets and financial liabilities are offset and presented on net basis in the Balance Sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
⢠Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
⢠Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by the Company are recognised at the proceeds received net off direct issue cost.
The Company recognises loss allowance using expected credit loss model for financial assets which are measured at amortised cost and FVOCI debt instruments, if any. Expected credit losses are weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at original effective rate of interest.
For Trade Receivables, the Company measures loss allowance at an amount equal to expected credit losses. The Company computes expected credit loss allowance based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
vii. Derecognition of Financial Assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or when the Company transfers its contractual rights to receive the cash flows of the financial asset in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset but does not retain control of the financial asset.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income
and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expired. The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different.
The Company derives revenue primarily from providing training in Information Technology, Media and Entertainment. The Company offers training mainly through the Franchisee model and Corporate Training under the head "Training and Education Services". The Company also earns revenue from providing Testing and Assessment Solution Services to private and public sector undertakings, government departments and educational institutions under its Institutional Segment ("Assessment Solution Services"). The main product offered by this division is Computer Aided Assessments, Digital Evaluation tool for paper-based exams, Pen and Paper Assessments and Document Digitalisation tool as separate products.
Revenue is recognised upon transfer of control of promised services to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those services.
Revenue related to fixed time frame services contracts where the Company is standing ready to provide services is recognised based on time elapsed mode and revenue is straight lined over the period of performance.
In respect of other fixed-price contracts, revenue is recognized as the related services are performed, that is on completion of the performance obligation. Revenue in respect of sale of Education course materials is recognised on delivery of the course materials to the customers.
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, service level credits, performance bonuses, price concessions and incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers.
Revenues in excess of invoicing are classified as contract assets (which we refer to as "Unbilled Revenue") while invoicing in excess of revenues are classified as contract liabilities (which we refer to as "Unearned Revenue").
The contract liabilities primarily relate to advance considerations received from customers for whom revenue is recognized as the related services are performed, that is on completion of performance obligation.
Advance collections are recognised when payment is received before the related performance obligation is satisfied. This includes advance received from the customer towards events fees, course-wares fees, etc. Revenue is recognised as the related services are performed, that is on completion of performance obligation.
Revenue from licenses where the customer obtains a right to use the license is recognised at the time the license is made available to the customer. Revenue from licenses where the customer obtains a right to access is recognised over the access period.
The billing schedules agreed with customers include periodic performance based payments and/or milestone based progress payments. Invoices are payable within contractually agreed credit period.
The Company disaggregates revenue from contracts with customers by nature of services, type of customers and geography.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a timely basis, by reference to the principal outstanding and at the effective interest rate applicable. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of that financial asset.
Dividend income from investments is recognised when the Company''s right to receive dividend is established, which is generally when shareholders approve the dividend except in case of Interim Dividend.
Net Franchisee fees income is recognised as operating income on an accrual basis in accordance with the substance of the relevant agreements with the franchisees as licensing-out technologies/Patent/Trade mark uses/ expertise''s is part of the ordinary and recurring activities of a business.
Income that relates to the sale or out-licensing of technologies or technological expertise is recognised in profit or loss as of the effective date of the respective agreement if all rights relating to the technological knowhow/Expertise''s and all obligations resulting from them have been transferred under the contract terms. However, if rights to the technologies/expertise''s continue to exist or obligations resulting from them have yet to be fulfilled, the revenue is deferred, accordingly.
Government grants are recognised at their fair value if there is reasonable assurance that the grant will be received and all related conditions will be complied with. Cost grants are recognised as income over the periods necessary to match the grant on a systematic basis to the cost that it is intended to compensate. If the grant is an investment grant, its fair value is initially recognised as deferred income in Other non-current liabilities and then released to profit or loss over the expected useful life of the relevant asset.
The Company''s leased assets consist of leases for Buildings and Computers. At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and (iii) the Company has the right to direct the use of the asset.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of Property, Plant and Equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company''s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.
The lease liability is subsequently measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company''s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Company has elected not to recognise right-to-use assets and lease liabilities for short-term lease that have a lease term of 12 months or less and leases of low-value assets. The Company recognises the lease payments associated with these leases as an operating expense as per the terms of the lease.
For lease modifications, the Company has adopted practical expedient w.r.t "Covid 19 related rent concessions" given in the amendments to Ind AS 116, notified by Ministry of Corporate Affairs on July 24, 2020.
As a Lessor:
When the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.
To classify each lease, the Company makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.
When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.
If an arrangement contains lease and non-lease components, the Company applies Ind AS 115 to allocate the consideration in the contract.
The Company recognises lease payments received under operating leases as income as per the terms of the lease as part of ''other income''.
The accounting policies applicable to the Company as a lessor in the comparative period were not different from Ind AS 116. However, when the Company was an intermediate lessor the sub-leases were classified with reference to the underlying asset.
(Refer Note 43 for disclosures pursuant to Ind AS 116.)
Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use. The criteria for held for sale classification is regarded met only when the assets or disposal group is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets (or disposal groups), its sale is highly probable; and it will genuinely be sold, not abandoned. Management must be committed to a plan to sell the asset and an active programme to locate a buyer and complete the plan must have been initiatedthe sale/ distribution and the sale should be expected within one year from the date of classification.
Non-current assets held for sale and disposal groups are measured at the lower of their carrying amount and the fair value less costs to sell. Assets and liabilities classified as held for sale are presented separately in the balance sheet.
A discontinued operation is a component of the Company''s business, the operations and cash flows of which can be clearly distinguished, operationally and for financial reporting purposes, from those of the rest of the Company.
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:
⢠Represents a separate major line of business or geographical area of operations,
⢠Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, or;
⢠Is a subsidiary acquired exclusively with a view to resale.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the Statement of profit and loss with all prior periods being presented on this basis.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The Company has reported Segment Information as per Ind AS 108. The Company has identified Operating Segments taking into account the services of Business Function, the differing risks and returns, the organizational structure and the internal reporting system.
The preparation of the financial statements requires the management to make judgements, estimates and assumptions in the application of accounting policies and that have the most significant effect on reported amounts of assets, liabilities, incomes and expenses, and accompanying disclosures, and the disclosure of contingent liabilities.
The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
The key assumptions concerning the future and other major sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below:
Significant judgements are involved in determining the provision for income taxes, including amount expected to be paid/ recovered for uncertain tax positions as also to determine the amount of deferred tax that can be recognised, based upon the likely timing and the level of future taxable profits. Also, Refer Note 35.
Property, Plant and Equipment/ Other Intangible Assets are depreciated/amortised over their estimated useful lives, after taking into account estimated residual value. The useful lives and residual values are based on the Company''s historical experience with similar assets and taking into account anticipated technological changes or commercial obsolescence. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation/ amortisation to be recorded during any reporting period. The depreciation/amortisaion for future periods is revised, if there are significant changes from previous estimates and accordingly, the unamortised/depreciable amount is charged over the remaining useful life of the assets.
iv. Leases
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgement. The Company uses significant judgement in assessing the lease
term (including anticipated renewals) and the applicable discount rate.
The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease.
The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics.
The cost of the defined benefit gratuity plan and other-post employment benefits and the present value of gratuity obligation is determined based on actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, attrition and mortality rates. Due to the complexities involved in the valuation and its long-term nature, these liabilities are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
vi. Fair Value measurements of Financial Instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets (Net Assets Value in case of units of Mutual Funds), their fair value is measured using valuation techniques including the Discounted Cash Flow (DCF) model.
The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
vii. Impairment of Financial Assets
The impairment provisions for financial assets are based on assumptions about risk of default
and expected cash loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
The Company reviews its carrying value of investments carried at amortised cost annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for. Also Refer Note 6.3.
An item of income and expense within profit or loss from ordinary activities is of such size, nature or incidence that their disclosure is relevant to explain the performance of the enterprise for the period, it is treated as an exceptional item and nature and amount of such item is disclosed separately in financial statements. Also Refer Note 6.3.
The Company has used certain judgements and estimates to work out future projections and discount rates to compute value in use of cash generating unit and to access impairment. In case of certain assets independent external valuation has been carried out to compute recoverable values of these assets.
Provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 23, 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, applicable from April 1st, 2022, as below::
The amendment specifies that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in the
Conceptual Framework for Financial Reporting under Indian Accounting Standards (Conceptual Framework) issued by the Institute of Chartered Accountants of India at the acquisition date. For example, costs the acquirer expects but is not obliged to incur in the future to effect its plan to exit an activity of an acquiree or to terminate the employment of or relocate an acquiree''s employees are not liabilities at the acquisition date. Therefore, the acquirer does not recognise those costs as part of applying the acquisition method and instead, the acquirer recognises those costs in its post combination financial statements in accordance with other Ind AS. This amendment does not significantly change the requirements of Ind AS 103 and the Company does not expect the amendment to have any significant impact in its financial statements.
The amendment clarifies that while performing the ''10 percent test'' for derecognition of a financial liability, for computing the discounted present value of the cash flows under the new terms, for determining fees paid net of fees received, a borrower should include only fees paid or received between borrower and lender, including fees paid or received by either the borrower or lender on the other''s behalf. This amendment is under Annual Improvements to Ind AS (2021). The Company does not expect the above amendment/ improvement to have any significant impact in its financial statements.
The amendment clarifies that excess of net sale proceeds of items produced over the cost of testing, if any, is not to be recognised in the profit or loss but is to be deducted from the directly attributable costs considered as part of cost of an item of property, plant, and equipment. The Company does not expect this amendment to have any significant impact on recognition of property, plant and equipment in its financial statements.
The amendment specifies that the ''cost of fulfilling'' a contract comprises the ''costs that relate directly to the contract''. Costs that relate directly to a contract consist of both, the incremental costs of fulfilling that contract (examples would be direct labour, materials) and an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). The amendment also provides for transitional provisions for contracts for which the entity has not yet fulfilled its obligations. The Company does not expect this amendment to have any significant impact in its financial statements. The amendments to Ind AS 101 - First Time Adoption and Ind AS 41 - Agriculture have not been specified here since both Standards are presently not applicable to the Company.
Mar 31, 2019
1. Corporate Information
Aptech limited ("The Company") is a public limited company incorporated and domiciled in India and has its registered office at Mumbai. The equity shares of the Company are listed on Bombay Stock Exchange Limited (BSE) and National Stock Exchange (NSE) of India Limited. The Company is primarily engaged in the business of education training and assessment solution services. It is a global learning solutions company that commenced its Education and Training business for the last over three decades.
The financial statements for the year ended March 31, 2019 are approved for issue by the Board of Directors of the Company on May 21, 2019.
2. Significant Accounting Policies
a. Basis of Preparation
These financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 as amended and notified under Section 133 of the Companies Act 2013 (the ''Act'') and other relevant provisions of the Act.
These Financial Statements are prepared on an accrual basis under the historical cost convention or mortised cost, except for following material items that have been measured at fair value as required by relevant Ind AS:
- Certain financial assets and liabilities that is measured at fair value;
- Net Defined benefit (asset)/liability - fair value of plan assets less present value of defined benefit obligations;
- Share based payments - at fair value
These financial statements are presented in Indian Rupees (INR), which is also the Company''s functional currency and all amounts are rounded off to the nearest lakhs (INR ''00,000) upto two decimals, except when otherwise indicated.
b. Property, Plant and Equipment(PPE)
PPE is recognized when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
PPE (other than Freehold land and Capital Work-in-progress) are stated at cost less accumulated depreciation and accumulated impairment losses, if any.
The initial cost of an asset comprises its purchase price, non-refundable purchase taxes and any costs directly attributable to bringing the asset into the location and condition necessary for it to be capable of operating in the manner intended by management.
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of item can be measured reliably. The carrying amount of any component accounted for as separate asset is recognized when replaced. All other repairs and maintenance are charged to the Statement of Profit and Loss during the reporting period in which they are incurred.
Freehold land is carried at historical cost less impairment loss, if any.
The carrying amount of an item of PPE is derecognized upon disposal or when no future economic benefit is expected to arise from its continued use. Any gain or loss arising on the derecognition of an item of PPE is determined as the difference between the net disposal proceeds and the carrying amount of the item and is recognized in Statement of Profit and Loss.
Capital Work-in-progress
Property, plant and equipment which are not ready for intended use on the date of balance sheet are disclosed as capital work-in-progress. It is carried at cost, less any recognized impairment loss. Such properties are classified and capitalized to the appropriate categories of Property, Plant and Equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Depreciation method, Estimated useful lives and residual value
Depreciation on Property, Plant and Equipment is provided over their estimated useful lives on a straight line basis from the date the same are ready for intended use. Useful life of PPE is in accordance with that prescribed in Schedule II, except in respect of the following items of PPE which is based on technical evaluation:
i. Certain items of plant and machinery (including computers) installed at and used in projects and certain training centers which are depreciated over the number of years till the completion of the period of the contract when the assets are transferred to those parties.
ii. Depreciation on PPE is provided at the following rates based on estimated useful life as per the Act,
Office Premises 60 years
Furniture and Fixtures 05 years
Computers Hardware 03 years
Office Equipment 05 years
Electrical Equipments 10 years
iii. Depreciation on Furniture and Fixtures which are installed at leasehold premises is provided over lease period. On other Furniture and Fixtures, the estimated useful life is considered to be that of 5 years.
iv. Depreciation on PPE added/ disposed off during the year is provided on pro-rata basis with reference to the date of addition/ disposal.
v. Items of PPE which has cost of '' 5,000 or less are depreciated fully in the year of purchase/capitalisation.
vi. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, while the effect of any change in estimate is accounted for on a prospective basis.
c. Intangible Assets
Intangible assets are recognized only if it is probable that the future economic benefits that are attributable to that asset will flow to the Company and the cost of the item can be measured reliably. Intangible assets are stated at cost less accumulated Amortization and accumulated impairment losses, if any. Directly attributable costs, that are capitalized as part of the software include employee costs and an appropriate portion of relevant expenses.
Amortization
Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, from the date they are available for use, as under :
Computer Software and Contents with a finite useful life using the straight-line method over the 3 years from the date they are available for use or based on its consumption pattern, as applicable.
The estimated useful life and Amortization method are reviewed at the end of each reporting period, while the effect of any change in estimate being accounted for on a prospective basis.
Goodwill arising on acquisition of business unit is amortized over a period of ten years.
d. Impairment of Non-financial Assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets may have been impaired. If any such indication exists, the recoverable amount, which is the higher of its value in use or its fair value less costs of disposal, of the asset or cash-generating unit, as the case may be, is estimated and impairment loss (if any) is recognized and the carrying amount is reduced to its recoverable amount.
In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
An impairment loss is recognized immediately in the Statement of Profit and Loss. When impairment subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but upto the amount that would have been determined, had no impairment loss been recognized for that asset or cash generating unit. A reversal of an impairment loss is recognized immediately in the Statement of Profit and Loss.
e. Inventories
Inventory of educational course material is valued at the lower of cost or net realizable value. Cost of such material is determined on Weighted Average basis.
f. Cash and Cash Equivalents
Cash and cash equivalents include cash in hand, demand deposits with the bank and other short term highly liquid investments, which are readily convertible into cash and which are subject to an insignificant risk of change in value and have original maturities of three months or less.
g. Cost recognition
Costs and expenses are recognized when incurred and are classified according to their nature.
h. Employee Share based payments
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the date of grant.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in Statement of Profit and Loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
i. Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when the Company has a present obligation (legal or constructive) as a result of past event, it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made of the amount of obligation. Provisions is not recognized for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
A Provision is measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. If the effect of the time value of money is material, the amount of provision is discounted using an appropriate pre-tax rate that reflects current market assessments of the time value of money and, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
A Contingent liability is disclosed in case of a present obligation arising from past events, when it is either not probable that an outflow of resources will be required to settle the obligation, or a reliable estimate of the amount cannot be made. A Contingent Liability is also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
A Contingent Asset is not recognized, but disclosed in the financial statements when an inflow of economic benefits is probable.
j. Employee Benefits:
Short-Term and Other Long-term Employee Benefits
A liability is recognized for benefits accruing to employees in respect of short-term employee benefits in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service. A liability is recognized for benefits accruing to employees in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by the employees up to the reporting date.
i. Defined Contribution Plan
The Company''s contribution to Provident Fund and Employee State Insurance Scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.
ii. Defined benefit plan
In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan ("Gratuity Plan") covering all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee''s last drawn salary and the years of employment with the Company. For defined benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each Balance sheet date. Re-measurement, comprising actuarial gains and losses, are recognized in full in the Other Comprehensive Income for the period in which they occur. Re-measurement recognized in Other Comprehensive Income is reflected immediately in retained earnings and is not reclassified to Profit and Loss. Past service cost both vested and non-vested is recognized as an expense at the earlier of (a) when the plan amendment or curtailment occurs; and (b) when the entity recognizes related restructuring costs or termination benefits.
The retirement benefit obligations recognized in the Balance sheet represents the present value of the defined benefit obligations reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the scheme.
Compensated Absences
The Company provides for the encashment of absence or absence with pay based on policy of the Company in this regard. The employees are entitled to accumulate such absences subject to certain limits, for the future encashment or absence. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.
k. Income Tax
Income tax expense represents the sum of the tax currently payable and deferred tax.
i. Current Tax
The tax currently payable is based on taxable profit for the year. Taxable profits differ from ''profit before tax'' as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using applicable tax rates that have been enacted or substantively enacted by the end of the reporting period and the provisions of the Income Tax Act, 1961 and other tax laws, as applicable.
Current tax assets and current tax liabilities are offset if there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the current tax liabilities and assets on a net or simultaneous basis.
ii. Deferred income taxes Deferred Tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the Company''s financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax liabilities are generally recognized for all taxable temporary differences.
Deferred tax assets are generally recognized for all taxable temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax asset to be recovered.
Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT is recognized as deferred tax asset in the Balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realized.
Deferred tax assets and deferred tax liabilities are offset if there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets and liabilities relate to the income tax levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the current tax liabilities and assets on a net or simultaneous basis.
Current and Deferred Tax for the year
Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in Other Comprehensive Income or directly in equity, in which case, the current and deferred tax are also recognized in Other Comprehensive Income or directly in equity, respectively.
l. Earnings per Share
The basic earnings per share are computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the reporting period. Diluted earnings per share is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except where the results would be anti-dilutive.
m. Foreign Currency Transactions
Transactions in foreign currencies are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at that date. Nonmonetary items, if any, that are measured at historical cost denominated in a foreign currency are translated using the exchange rate as at the date of initial transaction. Exchange differences on monetary items are recognized in profit or loss in the period in which they arise.
n. Statement of Cash Flows
Cash flows are reported using the indirect method, whereby net profit for the period is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents include cash on hand, cash at banks, other short-term deposits and highly liquid investments with original maturity of three months or less that are readily convertible into cash and which are subject to an insignificant risk of changes in value, as reduced by bank overdrafts.
o. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.
i. Initial Recognition:
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in the Statement of Profit and Loss.
ii. Classification and Subsequent Measurement: Financial Assets
The Company classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income ("FVOCI") or fair value through profit or loss ("FVTPL") on the basis of following:
- the entity''s business model for managing the financial assets; and
- the contractual cash flow characteristics of the financial assets.
a. Amortized Cost
A financial asset shall be classified and measured at amortized cost (based on Effective Interest Rate method), if both of the following conditions are met:
- the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Cash and bank balances, trade receivables, loans and other financial assets of the Company are covered under this category.
b. Fair Value through OCI
A financial asset shall be classified and measured at FVOCI, if both of the following conditions are met:
- the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
For financial assets that are measured at FVOCI, income by way of interest and dividend is recognized in profit or loss and changes in fair value (other than on account of such income) are recognized in Other Comprehensive Income and accumulated in other equity. On disposal of equity instruments measured at FVOCI, the cumulative gain or loss previously accumulated in other equity is not reclassified to profit or loss on disposal of investments.
The Company has made an irrevocable election to present subsequent changes in the fair value of equity investments not held for trading through FVOCI.
c. Fair Value through Profit or Loss
A financial asset shall be classified and measured at FVTPL unless it is measured at amortized cost or at FVOCI.
All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial assets.
iii. Classification and Subsequent Measurement: Financial liabilities
Financial liabilities are classified as either financial liabilities at FVTPL or ''other financial liabilities''.
a. Financial Liabilities at FVTPL:
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition as FVTPL. Gains or Losses on liabilities held for trading are recognized in the Statement of Profit and Loss.
b. Other Financial Liabilities:
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortized cost using the effective interest method.
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
iv. Offsetting:
Financial assets and financial liabilities are offset and presented on net basis in the Balance Sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.
v. Financial liabilities and equity instruments:
- Classification as debt or equity:
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
- Equity instruments:
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by the Company are recognized at the proceeds received net off direct issue cost.
vi. Impairment of financial assets:
The Company recognizes loss allowance using expected credit loss model for financial assets which are measured at amortized cost and FVTOCI debt instruments, if any. Expected credit losses are weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at original effective rate of interest.
For Trade Receivables, the Company measures loss allowance at an amount equal to expected credit losses. The Company computes expected credit loss allowance based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information
vii. Derecognition of Financial Assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or when the Company transfers its contractual rights to receive the cash flows of the financial asset in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset but does not retain control of the financial asset.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset.
viii. Derecognition of financial liabilities:
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expired. The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different.
p. Revenue Recognition
The Company derives revenue primarily from providing training in Information Technology, Media and Entertainment . The Company offers training mainly through the Franchisee model and Corporate Training under the head "Training and Education Services". The Company also earns revenue from providing Testing and Assessment Solution Services to private and public sector undertakings, government departments and educational institutions under its Institutional Segment ("Assessment Solution Services"). The main product offered by this division is Computer Aided Assessments, Digital Evaluation tool for paper-based exams, Pen and Paper Assessments and Document Digitalization tool as separate products.
Revenue is recognized upon transfer of control of promised services to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those services.
Revenue related to fixed time frame services contracts where the Company is standing ready to provide services is recognized based on time elapsed mode and revenue is straight lined over the period of performance.
In respect of other fixed-price contracts, revenue is recognized as the related services are performed, that is on completion of the performance obligation. Revenue in respect of sale of Education course materials is recognized on delivery of the course materials to the customers.
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, service level credits, performance bonuses, price concessions and incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers.
Revenues in excess of invoicing are classified as contract assets (which we refer to as "Unbilled Revenue") while invoicing in excess of revenues are classified as contract liabilities (which we refer to as "Unearned Revenue").
The contract liabilities primarily relate to advance considerations received from customers for whom revenue is recognized as the related services are performed, that is on completion of performance obligation.
Advance collections are recognized when payment is received before the related performance obligation is satisfied. This includes advance received from the customer towards events fees, course-wares fees, etc. Revenue is recognized as the related services are performed, that is on completion of performance obligation.
Revenue from licenses where the customer obtains a right to use the license is recognized at the time the license is made available to the customer. Revenue from licenses where the customer obtains a right to access is recognized over the access period.
The billing schedules agreed with customers include periodic performance based payments and / or milestone based progress payments. Invoices are payable within contractually agreed credit period.
The Company disaggregates revenue from contracts with customers by nature of services, type of customers and geography.
i. Interest Income
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a timely basis, by reference to the principal outstanding and at the effective interest rate applicable. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of that financial asset.
ii. Dividends
Dividend income from investments is recognized when the Group''s right to receive dividend is established, which is generally when shareholders approve the dividend except in case of Interim Dividend.
iii. Franchisee fees
Net Franchisee fees income is recognized as operating income on an accrual basis in accordance with the substance of the relevant agreements with the franchisees as licensing-out technologies / Patent /Trade mark uses /expertise''s is part of the ordinary and recurring activities of a business.
Income that relates to the sale or out-licensing of technologies or technological expertise is recognized in profit or loss as of the effective date of the respective agreement if all rights relating to the technological knowhow / Expertise''s and all obligations resulting from them have been transferred under the contract terms. However, if rights to the technologies / expertise''s continue to exist or obligations resulting from them have yet to be fulfilled, the revenue is deferred, accordingly.
iv. Government Grants
Government grants are recognized at their fair value if there is reasonable assurance that the grant will be received and all related conditions will be complied with. Cost grants are recognized as income over the periods necessary to match the grant on a systematic basis to the cost that it is intended to compensate. If the grant is an investment grant, its fair value is initially recognized as deferred income in Other non-current liabilities and then released to profit or loss over the expected useful life of the relevant asset.
q. Operating Leases
Leases in which a significant portion of the risks and rewards of ownership are not transferred to lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the less or) are charged to profit or loss on a straight-line basis over the period of the lease.
Where the rentals are structured solely to increase in line with expected general inflation to compensate for the less orâs expected inflationary cost increases, such increases are recognized in the year in which such benefits accrue.
r. Segment Reporting Policies
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
Identification of Segments
The Company has reported Segment Information as per Ind AS 108. The Company has identified Operating Segments taking into account the services of business function, the differing risks and returns, the organizational structure and the internal reporting system.
s. Critical Accounting Judgments and Key Sources of Estimation Uncertainty
The preparation of the financial statements requires the management to make judgments, estimates and assumptions in the application of accounting policies and that have the most significant effect on reported amounts of assets, liabilities, incomes and expenses, and accompanying disclosures, and the disclosure of contingent liabilities. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
i. Key estimates, assumptions and judgments
The key assumptions concerning the future and other major sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below:
ii. Income taxes
Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid/ recovered for uncertain tax positions as also to determine the amount of deferred tax that can be recognized, based upon the likely timing and the level of future taxable profits. Also, Refer Note 33.
iii. Property, Plant and Equipment/Intangible Assets
Property, Plant and Equipment/ Other Intangible Assets are depreciated/amortized over their estimated useful lives, after taking into account estimated residual value. The useful lives and residual values are based on the Company''s historical experience with similar assets and taking into account anticipated technological changes or commercial obsolescence. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation/Amortization to be recorded during any reporting period. The depreciation/amortization for future periods is revised, if there are significant changes from previous estimates and accordingly, the unamortized/depreciable amount is charged over the remaining useful life of the assets.
The cost of the defined benefit gratuity plan and other-post employment benefits and the present value of gratuity obligation is determined based on actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, attrition and mortality rates. Due to the complexities involved in the valuation and its long-term nature, these liabilities are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
v. Fair Value measurements of Financial Instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets (Net Assets Value in case of units of Mutual Funds), their fair value is measured using valuation techniques including the Discounted Cash Flow (DCF) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
vi. Impairment of Financial Assets
The impairment provisions for financial assets are based on assumptions about risk of default and expected cash loss rates. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
The Company reviews its carrying value of investments carried at amortized cost annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for.
The Company has used certain judgments and estimates to work out future projections and discount rates to compute value in use of cash generating unit and to access impairment. In case of certain assets independent external valuation has been carried out to compute recoverable values of these assets.
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflows of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgment to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.
3. Recent Indian Accounting Standards (Ind AS):
On March 30, 2019, Ministry of Corporate Affairs ("MCA"), through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian Accounting Standards) Second Amendment Rules, has issued the following new and amendments to Ind ASs and are effective from accounting periods beginning on or after April 1, 2019. The Company intends to adopt these standards, if applicable, from April 1, 2019.
Appendix C, Uncertainty over Income Tax Treatments
This amendment is to be applied while performing the determination of taxable profit (or loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. According to the Appendix, (1) the entity need to determine whether each tax treatment should be considered separately or whether some can be considered together. The decision should be based on the approach which better predicts of the resolution of the uncertainty (2) the entity is to assume that the taxation authority will have right to examine and have full knowledge of all related information when making those examinations (3) entity has to consider whether it is probable that the taxation authority will accept the tax treatment and accordingly, determine taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates would depend upon the probability.
The Company does not expect any significant impact of the amendment on its financial statements.
Consequences of Dividend
The amendment is in connection with accounting for dividend distribution taxes. The amendment clarifies that an entity shall recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognized those past transactions or events. The Company does not expect any impact from this amendment. It is relevant to note that the amendment does not amend situations where the entity pays a tax on dividend which is effectively a portion of dividends paid to taxation authorities on behalf of shareholders. Such amount paid or payable to taxation authorities continues to be charged to equity as part of dividend, in accordance with Ind AS 12.
Ind AS 19 - Plan Amendment, Curtailment or Settlement
The amendments clarify that if a plan amendment, curtailment or settlement occurs, it is mandatory that the current service cost and the net interest for the period after the re-measurement are determined using the assumptions used for the re-measurement. In addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling. The Company does not expect this amendment to have any significant impact on its financial statements.
The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalization rate on general borrowings. The Company does not expect any impact from this amendment.
Ind AS 28 - Long-term Interests in Associates and Joint Ventures
The amendments clarify that an entity applies Ind AS 109 Financial Instruments, to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied. The Company does not currently have any long-term interests in associates and joint ventures.
Ind AS 103 - Business Combinations and Ind AS 111 - Joint Arrangements
The amendments to Ind AS 103 relating to re-measurement clarify that when an entity obtains control of a business that is a joint operation, it re-measures previously held interests in that business. The amendments to Ind AS 111 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not re-measure previously held interests in that business. The Company will apply the pronouncement if and when it obtains control / joint control of a business that is a joint operation.
Ind AS 109 - Prepayment Features with Negative Compensation
The amendments relate to the existing requirements in Ind AS 109 regarding termination rights in order to allow measurement at amortized cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative compensation payments. The Company does not expect this amendment to have any impact on its financial statements.
I nd AS 116 on "Leases" will replace the existing leases standard, Ind AS 17 on "Leases". The new standard sets out the principles of recognition, measurement, presentation and disclosure for both parties to a lease contract, i.e. the lessee and the less or. The core principle of the new standard is that an entity should recognise most leases on its balance sheet. The new standard introduces a single lessee accounting model with limited exemptions and requires the lessee to recognize assets and liabilities for all leases with a term of more than twelve months, unless the underlying asset is of low value. Currently, operating lease expenses are charged to the Statement of Profit and Loss. Further, the standard also requires the enhanced disclosures. Ind AS 116 substantially carries forward the lessor accounting requirements as in Ind AS 17.
The standard permits two possible methods of transition :
- Full retrospective - Retrospectively to each prior period presented applying Ind AS 8 on "Accounting Policies, Changes in Accounting Estimates and Errors"
- Modified retrospective - Retrospectively, with the cumulative effect of initially applying the standard recognized at the date of initial application.
If a lessee elects to apply modified approach, the lessee shall not restate comparative information. Instead, the lessee shall recognize the cumulative effect of initially applying this Standard as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the date of initial application.
On completion of evaluation of the effect of adoption of Ind AS 116, the Company is proposing to use the ''Modified Retrospective Approach'' for transitioning to Ind AS 116, and take the cumulative adjustment to retained earnings on the date of initial application, that is on April 1, 2019. Accordingly, comparatives for the year ended March 31, 2019 will not be retrospectively adjusted.
The Company has evaluated the effect of this on its financial statements and the impact is not material.
6.1 Investments in Redeemable Preference Shares issued by Aptech Venture Limited are redeemable at the option of the issuer. Thus, these Preference Shares are in the nature of "Equity Instrumentsâ.
6.2 Tata Capital Preference Shares are Fully Paid-up Non-Convertible Cumulative Redeemable Non-Participating Preference Shares ("CRPS"). CRPS are redeemable after 7 years from the date of issue, i.e. July 12, 2017. The CRPS shall carry a preferential right with respect to ;
i. Payment of dividend calculated at a fixed rate at 7.5 % p.a. on Face Value.
ii. Repayment, in the case of a winding up or repayment of capital, of the amount of the share capital paid-up or deemed to have been paid-up, whether or not, there is a preferential right to the payment of any fixed premium.
11.1 Balances of Trade Receivables are subject to confirmation and reconciliation and generally non interest bearing.
11.2 Since the Company calculates impairment under the simplified approach for Trade Receivables, it is not required to separately track changes in credit risk of Trade Receivables as the impairment amount represents lifetime expected credit loss. Accordingly, based on a harmonious reading of Ind AS 109 and the break-up requirements under Schedule III, the disclosure for all such Trade Receivables is made as shown above.
11.3 I n determining the allowances for doubtful Trade Receivables (as also for Unbilled Revenue), the Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and rates used in the provision matrix. The Company estimates the following matrix at the reporting date.
13.1 Cash at banks earn interest at floating rates based on time deposit rates. Short-term deposits are made for varying periods of between three months and twelve months , depending on the immediate cash requirements of the Company, and earn interest at the respective short-term deposit rates. The deposits maintained by the Group with banks comprises time deposits, which can be withdrawn by the Group at any point without prior notice or penalty on the principal.
13.2 At March 31, 2019, the Company had available Rs, 69.74 lakhs (Previous Year : Rs, 927.63 lakhs) of undrawn committed borrowing facilities.
13.3 Bank Deposits include restricted balances of Rs, 1,012.97 lakhs (Previous Year : Rs, 1,836.07) lakhs respectively.The restriction are primarily on account of cash and bank balances held as margin money deposits against guarantees and overdraft facility.
13.4 There is no repatriation restriction with regard to Cash and Cash Equivalents as at the end of the current year and previous year.
Mar 31, 2018
1. Significant Accounting Policies
a. Basis of Preparation
These financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 as amended and notified under Section 133 of the Companies Act 2013 (the âActâ) and other relevant provisions of the Act.
For all periods upto and including for the financial year ended March 31, 2017, the Company prepared its financial statements in accordance with Accounting Standards specified under Section 133 of the Act read with applicable rules and the relevant provisions of the Act (âPrevious GAAPâ). The figures for the year ended March 31, 2017 have now been restated as per Ind AS to provide comparability.
These financial statements for the year ended March 31, 2018 are the Companyâs first Ind AS financial statements. The Company has adopted all the Ind AS and the adoption was carried out in accordance with Ind AS 101, âFirst-Time Adoption of Indian Accounting Standardsâ, the date of transition to Ind AS being April 1, 2016. Refer to Note âqâ for details of adoption of Ind AS.
These Financial Statements are prepared on an accrual basis under the historical cost convention or amortised cost, except for following material items that have been measured at fair value as required by relevant Ind AS:
- Certain financial assets and liabilities that is measured at fair value;
- Net Defined benefit (asset)/liability â fair value of plan assets less present value of defined benefit obligations;
- Share based payments â at fair value
These financial statements are presented in Indian Rupees (INR), which is also the Companyâs functional currency and all amounts are rounded off to the nearest lakhs (INR â00,000) upto two decimals, except when otherwise indicated.
b. Property, Plant and Equipment(PPE)
PPE is recognised when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
PPE (other than Freehold land and Capital Work-in-progress) are stated at cost less accumulated depreciation and accumulated impairment losses, if any.
The initial cost of an asset comprises its purchase price, non-refundable purchase taxes and any costs directly attributable to bringing the asset into the location and condition necessary for it to be capable of operating in the manner intended by management.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of item can be measured reliably. The carrying amount of any component accounted for as separate asset is recognised when replaced. All other repairs and maintenance are charged to the Statement of Profit and Loss during the reporting period in which they are incurred.
Freehold land is carried at historical cost less impairment loss, if any.
The carrying amount of an item of PPE is derecognised upon disposal or when no future economic benefit is expected to arise from its continued use. Any gain or loss arising on the derecognition of an item of PPE is determined as the difference between the net disposal proceeds and the carrying amount of the item and is recognised in Statement of Profit and Loss.
Capital Work-in-progress
Property, plant and equipment which are not ready for intended use on the date of balance sheet are disclosed as capital work-in-progress. It is carried at cost, less any recognised impairment loss. Such properties are classified and capitalised to the appropriate categories of Property, Plant and Equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Depreciation method, Estimated useful lives and residual value
Depreciation on Property, Plant and Equipment is provided over their estimated useful lives on a straight line basis from the date the same are ready for intended use. Useful life of PPE is in accordance with that prescribed in Schedule II, except in respect of the following items of PPE which is based on technical evaluation:
(i) Certain items of plant and machinery (including computers) installed at and used in projects and certain training centers which are depreciated over the number of years till the completion of the period of the contract when the assets are transferred to those parties.
(ii) Vehicles purchased under the âOwn Your Carâ (OYC) scheme for the employees, which are depreciated over the period of the scheme.
(iii) Goodwill arising on acquisition of business unit is amortised over a period of ten years.
(iv) Depreciation on PPE is provided at the following rates based on estimated useful life as per the Act,
Office Premises 60 years
Furniture and Fixtures 05 years
Computers Hardware 03 years
Office Equipment 05 years
Electrical Equipments 10 years
(v) Depreciation on Furniture and Fixtures which are installed at leasehold premises is provided over lease period. On other Furniture and Fixtures, the estimated useful life is considered to be that of 5 years.
(vi) Depreciation on PPE added/ disposed off during the year is provided on pro-rata basis with reference to the date of addition/ disposal.
(vii) Items of PPE which has cost of Rs. 5,000 or less are depreciated fully in the year of purchase/capitalisation.
(viii) The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, while the effect of any change in estimate is accounted for on a prospective basis.
c. Intangible Assets
Intangible assets are recognised only if it is probable that the future economic benefits that are attributable to that asset will flow to the Company and the cost of the item can be measured reliably. Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses, if any. Directly attributable costs, that are capitalised as part of the software include employee costs and an appropriate portion of relevant expenses.
Amortisation
Intangible assets are amortised over their respective individual estimated useful lives on a straight-line basis, from the date they are available for use, as under :
Computer Software and Contents with a finite useful life using the straight-line method over the 3 years from the date they are available for use or based on its consumption pattern, as applicable.
The estimated useful life and amortisation method are reviewed at the end of each reporting period, while the effect of any change in estimate being accounted for on a prospective basis.
d. Impairment of Non-financial Assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets may have been impaired. If any such indication exists, the recoverable amount, which is the higher of its value in use or its fair value less costs of disposal, of the asset or cash-generating unit, as the case may be, is estimated and impairment loss (if any) is recognised and the carrying amount is reduced to its recoverable amount.
In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
An impairment loss is recognised immediately in the Statement of Profit and Loss. When impairment subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but upto the amount that would have been determined, had no impairment loss been recognised for that asset or cash generating unit. A reversal of an impairment loss is recognised immediately in the Statement of Profit and Loss.
e. Inventories
Inventory of educational course material is valued at the lower of cost or net realisable value. Cost of such material is determined on Weighted Average basis.
f. Employee Share based payments
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the date of grant.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Companyâs estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in Statement of Profit and Loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
g. Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the Company has a present obligation (legal or constructive) as a result of past event, it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made of the amount of obligation. Provisions is not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
A Provision is measured at the present value of managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. If the effect of the time value of money is material, the amount of provision is discounted using an appropriate pre-tax rate that reflects current market assessments of the time value of money and, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
A Contingent liability is disclosed in case of a present obligation arising from past events, when it is either not probable that an outflow of resources will be required to settle the obligation, or a reliable estimate of the amount cannot be made. A Contingent Liability is also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
A Contingent Asset is not recognised, but disclosed in the financial statements when an inflow of economic benefits is probable.
h. Employee Benefits: Short-Term and Other Long-term Employee Benefits
A liability is recognised for benefits accruing to employees in respect of short-term employee benefits in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service. A liability is recognised for benefits accruing to employees in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by the employees up to the reporting date.
i) Defined Contribution Plan
The Companyâs contribution to Provident Fund and Employee State Insurance Scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.
ii) Defined benefit plan
In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (âGratuity Planâ) covering all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employeeâs last drawn salary and the years of employment with the Company. For defined benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each Balance sheet date. Re-measurement, comprising actuarial gains and losses, are recognised in full in the Other Comprehensive Income for the period in which they occur. Re-measurement recognised in Other Comprehensive Income is reflected immediately in retained earnings and is not reclassified to Profit and Loss. Past service cost both vested and non-vested is recognised as an expense at the earlier of (a) when the plan amendment or curtailment occurs; and (b) when the entity recognises related restructuring costs or termination benefits.
The retirement benefit obligations recognised in the Balance sheet represents the present value of the defined benefit obligations reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the scheme.
Compensated Absences
The Company provides for the encashment of absence or absence with pay based on policy of the Company in this regard. The employees are entitled to accumulate such absences subject to certain limits, for the future encashment or absence. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.
i. Income Tax
Income tax expense represents the sum of the tax currently payable and deferred tax.
i) Current Tax
The tax currently payable is based on taxable profit for the year. Taxable profits differ from âprofit before taxâ as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Companyâs current tax is calculated using applicable tax rates that have been enacted or substantively enacted by the end of the reporting period and the provisions of the Income Tax Act, 1961 and other tax laws, as applicable.
Current tax assets and current tax liabilities are offset if there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the current tax liabilities and assets on a net or simultaneous basis.
ii) Deferred income taxes Deferred Tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Companyâs financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax liabilities are generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all taxable temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax asset to be recovered.
Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT is recognised as deferred tax asset in the Balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised.
Deferred tax assets and deferred tax liabilities are offset if there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets and liabilities relate to the income tax levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the current tax liabilities and assets on a net or simultaneous basis.
Current and Deferred Tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in Other Comprehensive Income or directly in equity, in which case, the current and deferred tax are also recognised in Other Comprehensive Income or directly in equity, respectively.
j. Earnings per Share
The basic earnings per share are computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the reporting period. Diluted earnings per share is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except where the results would be anti-dilutive.
k. Foreign Currency Transactions:
Transactions in foreign currencies are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary items, if any, that are measured at historical cost denominated in a foreign currency are translated using the exchange rate as at the date of initial transaction. Exchange differences on monetary items are recognised in profit or loss in the period in which they arise.
l. Statement of Cash Flows
Cash flows are reported using the indirect method, whereby net profit for the period is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents include cash on hand, cash at banks, other shortterm deposits and highly liquid investments with original maturity of three months or less that are readily convertible into cash and which are subject to an insignificant risk of changes in value, as reduced by bank overdrafts.
m. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
i) Initial Recognition:
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the Statement of Profit and Loss.
ii) Classification and Subsequent Measurement: Financial Assets
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income (âFVOCIâ) or fair value through profit or loss (âFVTPLâ) on the basis of following:
- the entityâs business model for managing the financial assets; and
- the contractual cash flow characteristics of the financial assets.
a. Amortised Cost
A financial asset shall be classified and measured at amortised cost (based on Effective Interest Rate method), if both of the following conditions are met:
- the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Cash and bank balances, trade receivables, loans and other financial assets of the Company are covered under this category.
b. Fair Value through OCI
A financial asset shall be classified and measured at FVOCI, if both of the following conditions are met:
- the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
For financial assets that are measured at FVOCI, income by way of interest and dividend is recognised in profit or loss and changes in fair value (other than on account of such income) are recognised in Other Comprehensive Income and accumulated in other equity. On disposal of equity instruments measured at FVOCI, the cumulative gain or loss previously accumulated in other equity is not reclassified to profit or loss on disposal of investments.
The Company has made an irrevocable election to present subsequent changes in the fair value of equity investments not held for trading through FVOCI.
c. Fair Value through Profit or Loss
A financial asset shall be classified and measured at FVTPL unless it is measured at amortised cost or at FVOCI.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
iii) Classification and Subsequent Measurement: Financial liabilities
Financial liabilities are classified as either financial liabilities at FVTPL or âother financial liabilitiesâ.
a. Financial Liabilities at FVTPL:
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition as FVTPL. Gains or Losses on liabilities held for trading are recognised in the Statement of Profit and Loss.
b. Other Financial Liabilities:
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
iv) Offsetting:
Financial assets and financial liabilities are offset and presented on net basis in the Balance Sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
v) Financial liabilities and equity instruments:
- Classification as debt or equity:
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
- Equity instruments:
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received net off direct issue cost.
vi) Impairment of financial assets:
The Company recognises loss allowance using expected credit loss model for financial assets which are measured at amortised cost and FVTOCI debt instruments, if any. Expected credit losses are weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at original effective rate of interest.
For Trade Receivables, the Company measures loss allowance at an amount equal to expected credit losses. The Company computes expected credit loss allowance based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
vii) Derecognition of Financial Assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or when the Company transfers its contractual rights to receive the cash flows of the financial asset in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset but does not retain control of the financial asset.
On derecognition of a financial asset in its entirety, the difference between the assetâs carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
viii) Derecognition of financial liabilities:
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expired. The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different.
n. Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reported net of discounts and indirect taxes.
The Company recognises revenue when the amount of revenue can be reliably measured and it is probable that future economic benefits with the transaction will flow to the Company. When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue shall be recognised only to the extent of the expenses recognised that are recoverable.
Revenue is recognised only when evidence of an arrangement is obtained and the other criteria to support revenue recognition are met, including the price is fixed and determinable, services have been rendered and collectability of the resulting receivables is reasonably assured.
Revenue related to fixed price contracts is recognised in accordance with the proportionate completion method (PCM). The input (efforts expended) method is used to measure progress towards completion, as there is a direct relationship between input and productivity. Costs are recorded as incurred over the contract period. Any revision in cost to complete would result in increase or decrease in revenue and income and such changes are recorded in the period in which they are identified. Provisions for estimated losses, if any, on contracts-in-progress are recorded in the period in which such losses become probable based on the current contract estimates. Contract losses are determined to be the amount by which the estimated total cost to complete exceeds the estimated total revenues that will be generated by the contract and are included in cost of services and classified in provisions. For services accounted for under the PCM method, cost and earnings in excess of billing are classified as unbilled revenue, while billing in excess of cost and earnings are classified as deferred revenue.
Accordingly, Revenue in respect of Training and Education services is recognised on rendering of services, only when it is reasonably certain that the ultimate collection will be made. Revenue from fixed time contract is recognised using over the period of contracts. For services rendered through franchisees only the Companyâs share of revenue is recognised.
Revenue in respect of sale of Education course materials is recognised on delivery of the course materials to the customers.
i) Interest Income
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a timely basis, by reference to the principal outstanding and at the effective interest rate applicable. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of that financial asset.
ii) Dividends
Dividend income from investments is recognised when the Companyâs right to receive dividend is established, which is generally when shareholders approve the dividend.
o. Operating lease
Leases are classified as operating leases whenever the terms of the lease do not transfer substantially all the risks and rewards incidental to ownership.
Lease rentals on assets under operating lease are charged to the Statement of Profit and Loss on a straight line basis over the term of the relevant lease.
Assets leased out under operating leases are continued to be shown under the respective class of assets. Rental income is recognised on a straight line basis over the term of the relevant lease.
Where the rentals are structured solely to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases, such increases are recognised in the year in which such benefits accrue.
p. Segment Reporting Policies
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
Identification of Segments
The Company has reported Segment Information as per Ind AS 108. The Company has identified Operating Segments taking into account the nature of services, the differing risks and returns, the organizational structure and the internal reporting system.
q. Critical Accounting Judgements and Key Sources of Estimation Uncertainty
The preparation of the financial statements requires the management to make judgements, estimates and assumptions in the application of accounting policies and that have the most significant effect on reported amounts of assets, liabilities, incomes and expenses, and accompanying disclosures, and the disclosure of contingent liabilities. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
i) Key estimates, assumptions and judgements
The key assumptions concerning the future and other major sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below:
ii) Income taxes
Significant judgements are involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions as also to determine the amount of deferred tax that can be recognised, based upon the likely timing and the level of future taxable profits. Also, Refer Note 33.
iii) Property, Plant and Equipment/Intangible Assets
Property, Plant and Equipment/ Other Intangible Assets are depreciated/amortised over their estimated useful lives, after taking into account estimated residual value. The useful lives and residual values are based on the Companyâs historical experience with similar assets and taking into account anticipated technological changes or commercial obsolescence. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation/amortisation to be recorded during any reporting period. The depreciation/amortisaion for future periods is revised, if there are significant changes from previous estimates and accordingly, the unamortised/depreciable amount is charged over the remaining useful life of the assets.
iv) Employee Benefit Plans
The cost of the defined benefit gratuity plan and other-post employment benefits and the present value of gratuity obligation is determined based on actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, attrition and mortality rates. Due to the complexities involved in the valuation and its long-term nature, these liabilities are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
v) Fair Value measurements of Financial Instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets (Net Assets Value in case of units of Mutual Funds), their fair value is measured using valuation techniques includi ng the Discounted Cash Flow (DCF) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
vi) Impairment of Financial Assets
The impairment provisions for financial assets are based on assumptions about risk of default and expected cash loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Companyâs past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
The Company reviews its carrying value of investments carried at amortised cost annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for.
vii) Impairment of Assets
The Company has used certain judgements and estimates to work out future projections and discount rates to compute value in use of cash generating unit and to access impairment. In case of certain assets independent external valuation has been carried out to compute recoverable values of these assets.
viii) Provisions
Provisions and liabilities are recognised in the period when it becomes probable that there will be a future ouflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.
r. First-time Adoption of Ind AS
The Company has prepared the opening balance sheet as per Ind AS 101, First Time Adoption of Indian Accounting Standards as of April 1, 2016 (the date of transition) by recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS required under Ind AS, and applying Ind AS in measurement of recognised assets and liabilities. However, this principle is subject to certain exceptions and certain optional exemptions availed by the Company. The policy adotpted for the transition to Ind AS is detailed below:
i) Investments in subsidiary, joint ventures and associates
The Company has selected to adopt the previous GAAP carrying value as on the date of transition, i.e. April 1, 2016 of its investments in subsidiaries as its deemed cost.
ii) Business Combinations
The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated.
iii) Estimates
The estimates as at April 1, 2016 and at March 31, 2017 are consistent with the estimates made for the same dates in accordance with the previous GAAP.
iv) Deemed Cost for PPE, Intangible asset and Investment Property
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment, intangible assets and investment property recognised as of the transition date, that is, as at April 1, 2016, measured as per the previous GAAP and use that carrying value as the deemed cost of such Property, Plant and Equipment, Intangible Assets and Immovable Property. Accordingly, the Net block as at March 31, 2016 of these assets as per the previous GAAP have been considered as the deemed cost.
v) De-recognition of financial assets and liabilities
Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind
AS 109 retrospectively from a date of the entityâs choice, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.
The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.
vi) Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.
Under Ind AS 109, at initial recognition of a financial asset, an entity may make an irrevocable election to present subsequent changes in the fair value of an investment in an equity instrument in other comprehensive income. Ind AS 101 allows such designation of previously recognised financial assets, as âfair value through other comprehensive incomeâ on the basis of the facts and circumstances that existed at the date of transition to Ind AS.
Accordingly, the Company has designated its investments in certain equity instruments at fair value through other comprehensive income on the basis of the facts and circumstances that existed at the date of transition to Ind AS.
3. Ind AS issued but not yet effective:
Ministry of Corporate Affairs (âMCAâ) through the Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new and amendments to Ind ASs:
Ind AS 21 : The Effects of Changes in Foreign Exchange Rates
Appendix B to Ind AS 21, Foreign Currency Transactions and Advance Consideration is inserted to clarify the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. The Appendix explains that the date of the transaction, for the purpose of determining the exchange rate, to use on the initial recognition of the related asset, expense or income (or part of it) is the date on which the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration.
If there are multiple payments or receipts in advance, the date of the transaction is determined for each payment or receipt of advance consideration.
The amendment will come into force from April 1, 2018. The Company has evaluated the effect of this on its financial statements and the impact is not material.
Ind AS 115 : Revenue from Contracts with Customers
Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standard Ind As 18 on âRevenueâ and Ind AS 11 on âConstruction Contractsâ.
The core principle of Ind AS 115 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Under Ind AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when âcontrolâ of the goods or services underlying the particular performance obligation is transferred to the customer.
Further, Ind AS 115, requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers.
Ind AS 115 permits two possible methods of transition:
- Retrospective approach - Under this approach the standard is applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors.
- Retrospectively with cumulative effect of initially applying the standard recognised at the date of initial application (Cumulative catch -up approach) only to contracts that are not completed contracts on that date. Under this method, cumulative effect is recognised as an adjustment to the opening balance of retained earnings of the annual reporting period.
The effective date for adoption of Ind AS 115 is accounting period beginning on or after April 1, 2018.
Mar 31, 2017
A) Significant Accounting Policies:
Accounting Convention
(a) Basis of Preparation
The financial statements have been prepared in accordance with generally accepted accounting principles in India (âIndian GAAPâ) under the historical cost convention on an accrual basis in compliance with all material aspect of the Accounting Standard (âASâ) notified under section 133 of the Companies Act, 2013 (âthe Actâ) read with Rule 7 of Companies (Accounts) Rules, 2014. The accounting policies have been consistently applied by the Company, and are consistent with those used in the previous year, unless otherwise mentioned in the notes.
Based on the nature of products/ services and their realization in cash and cash equivalents, the company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities, in terms of Revised Schedule III to the Act.
(b) Use of Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amount of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized in the period in which such revisions are made.
(c) Fixed Assets (Property, Plant & Equipments & Intangible Assets)
Fixed assets are stated at cost less accumulated depreciation and impairment loss if any. Cost comprises the purchase price and any cost, attributable to bringing the asset to its working condition for its intended use.
Intangible assets are recognized only if it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortisation.
(d) Depreciation and Amortisation
Depreciation on fixed assets is provided on economic useful life of the Assets in the manner specified in the Schedule II of the act, except,
i. Certain items of Plant and machinery (including computers) installed at and used in Institutional projects and certain training centers which are depreciated over the number of years till the completion of the period of the contract when the assets are transferred to those parties.
ii. Vehicles purchased under the âOwn Your Carâ (OYC) scheme for the employees, which are depreciated over the period of the scheme.
iii. Goodwill arising on acquisition of business unit is amortised over a period of ten years.
iv. Depreciation on Fixed Assets are provided at the following rates based on estimated useful life as per the Act.
Office Premises 60 years
Furniture & fixtures 5 years
Computers Hardware, Software & Courseware 3 years
Office Equipment 5 years
Electrical Equipments 10 years
v. Depreciation on furniture & fixtures which are installed at leasehold premises, are amortised over lease period
vi. Depreciation on the fixed assets added / disposed off / discarded during the year has been provided on pro-rata basis with reference to the date of addition / disposition / discardation
vii. Assets purchased during the year whose acquisition cost is Rs 5,000 or less are depreciated fully in the month of purchase.
(e) Impairment of Fixed Assets
The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying cost of the assets exceed its recoverable value. An impairment loss, if any, is charged to the Statement of profit and loss in the year, in which an asset is identified as impaired. When there is indication that an impairment loss recognised for an assets earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.
(f) Borrowing Costs
Borrowing costs attributable to acquisition or construction of qualifying assets are capitalised as a part of the cost of such assets up to the date when such asset is ready for its intended use.
All other borrowing costs are charged to Statement of Profit and Loss in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
(g) Foreign Currency Transactions
Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Foreign currency monetary items are reported using closing rate of exchange at the end of the year. The resulting exchange gain/loss is reflected in the Statement of profit and loss. Other non-monetary items, like fixed assets, investments in equity shares, are carried in terms of historical cost using the exchange rate at the date of transaction.
Any Premium/discount arising at the inception of a forward exchange contract is recognized as income/expenses over the life of the contracts, except where the contract is designated as a cash flow hedge. Any Profit/Loss on cancellation/renewal of forward exchange contract is recognized as income/expense for the year.
(h) Investments
Investments which, being readily disposable and are intended to be held for period lesser than a year are considered as âCurrentâ and other Investments are termed as âLong Termâ. Current Investments are stated at lower of cost and fair value, determined by category of investment.
Long Term Investments are stated at cost after deducting provision, if any, made for decline, other than temporary in the value.
(i) Inventories
Inventory of educational course material is valued at cost or net realisable value whichever is lower. Cost is determined on Weighted Average basis.
(j) Government Grants
Government Grants are recognized when there is reasonable assurance that the same will be received. Revenue grants are recognized in the Statement of profit and loss. Capital grants relating to specific fixed assets are reduced from the gross value of the respective fixed assets. Other capital grants are credited to capital reserve.
(k) Revenue Recognition
Revenue in respect of Training and Education services is recognised on rendering of services, only when it is reasonably certain that the ultimate collection will be made. The revenue from fixed time contracts is recognized over the period of contracts. For services rendered through franchisees only the companyâs share of revenue is recognized.
Revenue in respect of sale of Education course materials is recognised on delivery of the course materials to the customers.
Revenue is recognized when significant risks & rewards of the goods and services have been transferred to the buyer & when it is probable that the economic benefits will flows to the Company and revenue can be reliably measured.
Dividend from investments is recognised in the Statement of Profit and Loss, when the right to receive payment is established.
Interest Income is recognised on a time proportion basis taking into account the amount outstanding and applicable interest rate.
(l) Retirement Benefits Defined Contribution plan
The Companyâs makes defined contribution to Government Employee Provident Fund, Government Employee Pension Fund, Employee Deposit Linked Insurance, ESI and Superannuation Schemes, which are recognised in the Statement of Profit and Loss on accrual basis.
Defined benefit plan
The Companyâs liabilities under Payment of Gratuity Act (funded) and long term compensated absences are determined on the basis of actuarial valuation made at the end of each financial year using the projected unit credit method except for short term compensated absences, which are provided on estimates. Actuarial gain & losses are recognized immediately in the statement of profit and loss as income or expenses. Obligation is measured at the present value of estimated future cash flows using the discounted rate that is determined by reference to market yields at the Balance Sheet date on government bonds where the currency and terms of the government bonds are consistent with the currency and estimated terms of the defined benefit obligation
(m) Employees Stock Option Plan ( ESOP)
In respect of the stock option granted to employees pursuant to the Companyâs stock option schemes, accounting is done as per the Fair value method as permitted by the Securities Exchange Board of India SEBI (Share Based Employee Benefits) regulations 2014 and the Guidance Note on Accounting for employee Share Based Payment issued by the ICAI, whereby the Fair value of the option is recognized as deferred employee compensation. The deferred employee compensation is charged to Statement of profit & loss account on straight line basis over the vesting period of the option. The options that lapse are reversed by a credit to employee compensation expense, to the extent of the amortised portion of value of lapsed portion.The Employee Stock Option Account (share option outstanding account), net of any unamortised deferred employee compensation is shown separately as part of reserves.
(n) Income Tax
Tax expense comprises of current and deferred tax.
Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income Tax Act, 1961.
The deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the Balance Sheet Date. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that these would be realized in future.
Deferred tax assets, in case of unabsorbed losses and unabsorbed depreciation, are recognized only if there is virtual certainty supported by convincing evidence that sufficient future tax income will be available against which such deferred tax asset can be realized.
(o) Operating Lease
Leases, where significant portion of risk and reward of ownership are retained by the Lessor, are classified as Operating Leases and lease rentals thereon are charged to the Statement of profit and loss on a straight-line basis over the lease term.
(p) Cash and Cash Equivalents
Cash and Cash Equivalents for the purpose of cash flow statement comprise cash on hand and cash at bank including fixed deposit with original maturity period of less than three months and short term highly liquid investments with an original maturity of three months or less.
(q) Provisions, Contingent Liabilities and Contingent Assets
Contingent Liabilities are possible but not probable obligations as on Balance Sheet date, based on the available evidence.
Provisions are recognised when there is a present obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.
Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date.
Department appeals, in respect of cases won by the Company, are also considered as contingent Liabilities.
Contingent Assets are neither recognized, nor disclosed.
(r) Segment Reporting Policies
(i) Identification of segments
The Company has disclosed Business Segment as the primary segment. Segments have been identified taking into account the nature of the products and services provided the differing risks and returns, the organization structure and internal reporting system.
The Company has identified geographical markets as the secondary segments. Geographical revenues are allocated based on the location of the customer. The analysis of geographical segments is based on the areas in which major operating divisions of the Group operate.
(ii) Inter segment Transfers
The Group generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices.
(iii) Allocation of Assets and liabilities
Assets and liabilities that are directly attributable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable.
(iv) Allocation of Income and expenses
Income and expenses directly attributable to segments are reported under each reportable segment. Common expenses which are not directly identifiable to each reporting segment have been allocated to each reporting segment on the basis of relative contribution of each segment to the total common costs.
All other income and expenses which are not attributable or allocable to segments have been disclosed as unallocable items
(s) Hedge Accounting
The Company has started hedging its risk of foreign currency fluctuations relating to receivables of highly probable forecast transactions pertaining to Franchise income by entering into Exchange Traded Futures (ETFâs). In accordance with Companyâs risk mitigating policy, it has designated these ETFâs as cash flow hedge by early application of the recognition and measurement principles set out in the Accounting Standard 30 âFinancial Instrument-Recognition and Measurementâ to these transactions. Accordingly, changes in the fair value of these ETFâs designated as effective hedges for the future cash flows are recognised directly in shareholderâs funds and ineffective portion thereof is recognised directly in the â Statement of profit and lossâ. On squaring off the complete position of such ETF on expire, sold, terminated or no longer qualifies for hedge accounting as on any date the gain or loss on such transactions is accounted in statement of profit and loss.
Mar 31, 2016
(a) Basis of Preparation
The financial statements have been prepared in accordance with
generally accepted accounting principles in India (''Indian GAAP'') under
the historical cost convention on an accrual basis in compliance with
all material aspect of the Accounting Standard (''AS'') notified under
section 133 of the Companies Act/ 2013 (''the Act'') read with Rule 7 of
Companies (Accounts) Rules/ 2014. The accounting policies have been
consistently applied by the Company/ and are consistent with those used
in the previous year/ unless otherwise mentioned in the notes.
Based on the nature of products/ services and their realization in cash
and cash equivalents/ the company has ascertained its operating cycle
as twelve months for the purpose of current and non-current
classification of assets and liabilities/ in terms of Revised Schedule
III to the Act.
(b) Use of Estimates.
The preparation of the financial statements in conformity with
generally accepted accounting principles requires Management to make
judgments/ estimates and assumptions that affect the application of
accounting policies and reported amount of assets/ liabilities/ income
and expenses and the disclosure of contingent liabilities on the date
of financial statements. Actual results could differ from those
estimates. Any revision to accounting estimates is recognized in the
period in which such revisions are made.
(c) Fixed Assets
Fixed assets are stated at cost less accumulated depreciation and
impairment loss if any. Cost comprises the purchase price and any cost,
attributable to bringing the asset to its working condition for its
intended use.
Intangible assets are recognized only if it is probable that the future
economic benefits that are attributable to the asset will flow to the
enterprise and the cost of the asset can be measured reliably. The
intangible assets are recorded at cost and are carried at cost less
accumulated Amortization.
(d) Depreciation and Amortization
Depreciation on fixed assets is provided on economic useful life of the
Assets in the manner specified in the Schedule II of the Act , except,
(i) Certain items of Plant and machinery (including computers)
installed at and used in Institutional projects and certain training
centers which are depreciated over the number of years till the
completion of the period of the contract when the assets are
transferred to those parties.
(ii) Vehicles purchased under the "Own Your Car" (OYC) scheme for the
employees, which are depreciated over the period of the scheme.
(iii) Goodwill arising on acquisition of business unit is amortized
over a period often years.
(iv) Depreciation on Fixed Assets are provided at the following rates
based on estimated useful life as per the Act,
Office Premises 60 years
F u rn itu re & fixtu res 5 yea rs
Computers Hardware, Software & Courseware 3 years
Office Equipment 5 years
Electrical Equipments 10 years
(v) Depreciation on furniture & fixtures which are installed at
leasehold premises, are amortized over lease period
(vi) Depreciation on the fixed assets added / disposed off / discarded
during the year has been provided on pro-rata basis with reference to
the date of addition / disposition / dissertation
(vii) Assets purchased during the year whose acquisition cost is ^
5,000 or less are depreciated fully in the month of purchase.
(e) Impairment of Fixed Assets
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal/external
factors. An asset is treated as impaired when the carrying cost of the
assets exceed its recoverable value. An impairment loss, if any, is
charged to the Statement of profit and loss in the year, in which an
asset is identified as impaired. When there is indication that an
impairment loss recognized for an assets earlier accounting periods no
longer exists or may have decreased, such reversal of impairment loss
is recognized in the Statement of Profit and Loss, except in case of
revalued assets.
(f) Borrowing Costs
Borrowing costs attributable to acquisition or construction of
qualifying assets are capitalized as a part of the cost of such assets
up to the date when such asset is ready for its intended use.
All other borrowing costs are charged to Statement of Profit and Loss
in the period in which they are incurred. Borrowing costs consist of
interest and other costs that an entity incurs in connection with the
borrowing of funds.
(g) Foreign Currency Transactions
Transactions in foreign currency are recorded at the rate of exchange
prevailing on the date of transaction. Foreign currency monetary items
are reported using closing rate of exchange at the end of the year. The
resulting exchange gain/loss is reflected in the Statement of profit
and loss. Other non-monetary items, like fixed assets, investments in
equity shares, are carried in terms of historical cost using the
exchange rate at the date of transaction.
Any Premium/discount arising at the inception of a forward exchange
contract is recognized as income/expenses over the life of the
contracts, except where the contract is designated as a cash flow
hedge. Any Profit/Loss on cancellation/renewal of forward exchange
contract is recognized as income/expense for the year.
(h) Investments
Investments which, being readily disposable and are intended to be held
for period lesser than a year are considered as ''Current'' and other
Investments are termed as ''Long Term''. Current Investments are stated
at lower of cost or fair value, determined by category of investment.
Long Term Investments are stated at cost after deducting provision, if
any, made for decline, other than temporary in the value.
(i) Inventories
Inventory of educational course material is valued at cost or net
realizable value whichever is lower. Cost is determined on Weighted
Average basis.
(j) Government Grants
Government Grants are recognized when there is reasonable assurance
that the same will be received. Revenue grants are recognized in the
Statement of profit and loss. Capital grants relating to specific fixed
assets are reduced from the gross value of the respective fixed assets.
Other capital grants are credited to capital reserve.
(k) Revenue Recognition
Revenue in respect of Training and Education services is recognized on
rendering of services/ only when it is reasonably certain that the
ultimate collection will be made. The revenue from fixed time contracts
is recognized over the period of contracts. For services rendered
through franchisees only the company''s share of revenue is recognized.
Revenue in respect of sale of Education course materials is recognized
on delivery of the course materials to the customers.
Revenue is recognized when significant risks & rewards of the goods &
services have been transferred to the buyer and when it is probable
that the economic benefits flows to the Company and revenue can be
reliably measured .
Dividend from investments is recognized in the Statement of Profit and
Loss/ when the right to receive payment is established.
Interest Income is recognized on a time proportion basis taking into
account the amount outstanding and applicable interest rate.
(I) Retirement Benefits
Defined Contribution plan
The Company makes defined contribution to Government Employee Provident
Fund/ Government Employee Pension Fund/ Employee Deposit Linked
Insurance/ ESI and Superannuation Schemes/ which are recognized in the
Statement of Profit and Loss on accrual basis.
Defined benefit plan
The Company liabilities under Payment of Gratuity Act (funded) and long
term compensated absences are determined on the basis of actuarial
valuation made at the end of each financial year using the projected
unit credit method except for short term compensated absences/ which
are provided on estimates. Actuarial gain & losses are recognized
immediately in the statement of profit and loss as income or expenses.
Obligation is measured at the present value of estimated future cash
flows using the discounted rate that is determined by reference to
market yields at the Balance Sheet date on government bonds where the
currency and terms of the government bonds are consistent with the
currency and estimated terms of the defined benefit obligation
(m) Employees Stock Option Plan ( ESOP)
The stock options granted are accounted for as per the accounting
treatment prescribed by Employee Stock option Scheme and Employee Stock
Purchase Guidelines/ 1 999/ issued by Securities and Exchange Board of
India/ whereby the intrinsic value of the option is recognized as
deferred employee compensation. The deferred employee compensation is
charged to Statement of profit and loss on straight line basis over the
vesting period of the option. The options that lapse are reversed by a
credit to employee compensation expense/ to the extent of the amortized
portion of value of lapsed portion. The costs incurred on account of
ESOP granted to employees of subsidiary companies are recovered from
the subsidiaries. The Employee Stock Option Account (share option
outstanding account)/ net of any unamortized deferred employee
compensation is shown separately as part of reserves.
(n) Income Tax
Tax expense comprises of current tax and deferred tax.
Provision for current tax is made on the basis of estimated taxable
income for the current accounting year in accordance with the Income
Tax Act/ 1961.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for/ using the tax rates and laws
that have been substantively enacted as of the Balance Sheet Date.
Deferred tax assets arising from timing differences are recognized to
the extent there is reasonable certainty that these would be realized
in future.
Deferred tax assets/ in case of unabsorbed losses and unabsorbed
depreciation/ are recognized only if there is virtual certainty
supported by convincing evidence that sufficient future tax income will
be available against which such deferred tax asset can be realized.
(o) Operating Lease
Leases/ where significant portion of risk and reward of ownership are
retained by the Less or/ are classified as Operating Leases and lease
rentals thereon are charged to the Statement of profit and loss on a
straight-line basis over the lease term.
(p) Cash and Cash Equivalents
Cash and Cash Equivalents for the purpose of cash flow statement
comprise cash on hand and cash at bank including fixed deposit with
original maturity period of less than three months and short term
highly liquid investments with an original maturity of three months or
less.
(q) Provisions, Contingent Liabilities and Contingent Assets
Contingent Liabilities are possible but not probable obligations as on
Balance Sheet date/ based on the available evidence.
Provisions are recognized when there is a present obligation as a
result of past events/ and it is probable that an outflow of resources
will be required to settle the obligation/ in respect of which a
reliable estimate can be made.
Provisions are not discounted to its present value and are determined
based on best estimate required to settle the obligation at the Balance
Sheet date.
Department appeals/ in respect of cases won by the Company/ are also
considered as contingent Liabilities.
Contingent Assets are neither recognized/ nor disclosed.
(r) Hedge Accounting
The Company has started hedging its risk of foreign currency
fluctuations relating to receivables of highly probable forecast
transactions pertaining to Franchise income by entering into Exchange
Traded Futures (ETF''s). In accordance with Company''s risk mitigating
policy/ it has designated these ETF''s as cash flow hedge by early
application of the recognition and measurement principles set out in
the AS 30 "Financial Instrument-Recognition and Measurement" to these
transactions. Accordingly/ changes in the fair value of these ETF''s
designated as effective hedges for the future cash flows are recognized
directly in shareholder''s funds and ineffective portion thereof is
recognized directly in the Statement of profit and loss''. On squaring
off the complete position of such ETF on expire/ sold/ terminated or no
longer qualifies for hedge accounting as on any date the gain or loss
on such transactions is accounted in statement of profit and loss.
Mar 31, 2015
Accounting Convention
(a) Basis of Preparation
The financial statements have been prepared in accordance with
generally accepted accounting principles in India ('Indian GAAP') under
the historical cost convention on an accrual basis in compliance with
all material aspect of the Accounting Standard ('AS') notified under
section 133 of the Companies Act, 2013 ('the Act') read with Rule 7 of
Companies (Accounts) Rules, 2014. The accounting policies have been
consistently applied by the Company, and are consistent with those used
in the previous year, unless otherwise mentioned in the notes.
Based on the nature of products/ services and their realization in cash
and cash equivalents, the company has ascertained its operating cycle
as twelve months for the purpose of current and non-current
classification of assets and liabilities, in terms of Revised Schedule
III to the Act.
(b) Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
judgments, estimates and assumptions that affect the application of
accounting policies and reported amount of assets, liabilities, income
and expenses and the disclosure of contingent liabilities on the date
of financial statements. Actual results could differ from those
estimates. Any revision to accounting estimates is recognized in the
period in which such revisions are made.
(c) Fixed Assets
Fixed assets are stated at cost less accumulated depreciation and
impairment loss if any. Cost comprises the purchase price and any cost,
attributable to bringing the asset to its working condition for its
intended use.
Intangible assets are recognized only if it is probable that the future
economic benefits that are attributable to the asset will flow to the
enterprise and the cost of the asset can be measured reliably. The
intangible assets are recorded at cost and are carried at cost less
accumulated amortisation.
(d) Depreciation and Amortisation
Depreciation on fixed assets is provided on economic useful life of the
Assets in the manner specified in the Schedule II of the the Act,
except,
(i) Certain items of Plant and machinery (including computers)
installed at and used in Institutional projects and certain training
centers which are depreciated over the number of years till the
completion of the period of the contract when the assets are
transferred to those parties.
(ii) Vehicles purchased under the "Own Your Car" (OYC) scheme for the
employees, which are depreciated over the period of the scheme.
(iii) Goodwill arising on acquisition of business unit is amortised
over a period of ten years.
(iv) Depreciation on Fixed Assets are provided at the following rates
based on estimated useful life as per the Act
Buildings/Premises 30 years
Furniture & fixtures 5 years
Computers Hardware, Software & Courseware 3 years
Office Equipment 5 years
Electrical Equipments 10 years
(v) Depreciation on furniture & fixtures which are installed at
leasehold premises, are amortised over lease period
(vi) Depreciation on the fixed assets added / disposed off / discarded
during the year has been provided on pro-rata basis with reference to
the date of addition / disposition / discardation
(vii) Assets purchased during the year whose acquisition cost is Rs.
5,000 or less are depreciated fully in the month of purchase.
(e) Impairment of Fixed Assets
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal/external
factors. An asset is treated as impaired when the carrying cost of the
assets exceed its recoverable value. An impairment loss, if any, is
charged to the Statement of profit and loss in the year, in which an
asset is identified as impaired. When there is indication that an
impairment loss recognised for an assets earlier accounting periods no
longer exists or may have decreased, such reversal of impairment loss
is recognised in the Statement of Profit and Loss, except in case of
revalued assets.
(f) Borrowing Costs
Borrowing costs attributable to acquisition or construction of
qualifying assets are capitalised as a part of the cost of such assets
up to the date when such asset is ready for its intended use.
All other borrowing costs are charged to Statement of Profit and Loss
in the period in which they are incurred. Borrowing costs consist of
interest and other costs that an entity incurs in connection with the
borrowing of funds.
(g) Foreign Currency Transactions
Transactions in foreign currency are recorded at the rate of exchange
prevailing on the date of transaction. Foreign currency monetary items
are reported using closing rate of exchange at the end of the year. The
resulting exchange gain/loss is reflected in the Statement of profit
and loss. Other non- monetary items, like fixed assets, investments in
equity shares, are carried in terms of historical cost using the
exchange rate at the date of transaction.
Any Premium/discount arising at the inception of a forward exchange
contract is recognized as income/expenses over the life of the
contracts, except where the contract is designated as a cash flow
hedge. Any Profit/Loss on cancellation/renewal of forward exchange
contract is recognized as income/ expense for the year.
(h) Investments
Investments which, being readily disposable and are intended to be held
for period lesser than a year are considered as 'Current' and other
Investments are termed as 'Long Term'. Current Investments are stated
at lower of cost and fair value, determined by category of investment.
Long Term Investments are stated at cost after deducting provision, if
any, made for decline, other than temporary in the value.
(i) Inventories
Inventory of educational course material is valued at cost or net
realisable value whichever is lower. Cost is determined on Weighted
Average basis.
(j) Government Grants
Government Grants are recognized when there is reasonable assurance
that the same will be received. Revenue grants are recognized in the
Statement of profit and loss. Capital grants relating to specific fixed
assets are reduced from the gross value of the respective fixed assets.
Other capital grants are credited to capital reserve.
(k) Revenue Recognition
Revenue in respect of Training and Education services is recognised on
rendering of services, only when it is reasonably certain that the
ultimate collection will be made. The revenue from fixed time contracts
is recognized over the period of contracts. For services rendered
through franchisees only the company's share of revenue is recognized.
Revenue in respect of sale of Education course materials is recognised
on delivery of the course materials to the customers Dividend from
investments is recognised in the Statement of Profit and Loss, when the
right to receive payment is established.
Interest Income is recognised on a time proportion basis taking into
account the amount outstanding and applicable interest rate.
(l) Retirement Benefits
Defined Contribution plan
The Company makes defined contribution to Government Employee Provident
Fund, Government Employee Pension Fund, Employee Deposit Linked
Insurance, ESI and Superannuation Schemes, which are recognised in the
Statement of Profit and Loss on accrual basis.
Defined benefit plan
The Company's liabilities under Payment of Gratuity Act (funded) and
long term compensated absences are determined on the basis of actuarial
valuation made at the end of each financial year using the projected
unit credit method except for short term compensated absences, which
are provided on estimates. Actuarial gain & losses are recognized
immediately in the statement of profit and loss as income or expenses.
Obligation is measured at the present value of estimated future cash
flows using the discounted rate that is determined by reference to
market yields at the Balance Sheet date on government bonds where the
currency and terms of the government bonds are consistent with the
currency and estimated terms of the defined benefit obligation
(m) Employees Stock Option Plan ( ESOP)
The stock options granted are accounted for as per the accounting
treatment prescribed by Employee Stock option Scheme and Employee Stock
Purchase Guidelines, 1999, issued by Securities and Exchange Board of
India, whereby the intrinsic value of the option is recognized as
deferred employee compensation. The deferred employee compensation is
charged to Statement of profit and loss on straight line basis over the
vesting period of the option. The options that lapse are reversed by a
credit to employee compensation expense, to the extent of the amortised
portion of value of lapsed portion. The costs incurred on account of
ESOP granted to employees of subsidiary companies are recovered from
the subsidiaries. The Employee Stock Option Account (share option
outstanding account), net of any unamortised deferred employee
compensation is shown separately as part of reserves.
(n) Income Tax
Tax expense comprises of current, wealth and deferred tax.
Provision for current tax is made on the basis of estimated taxable
income for the current accounting year in accordance with the Income
Tax Act, 1961.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for, using the tax rates and laws
that have been substantively enacted as of the Balance Sheet Date.
Deferred tax assets arising from timing differences are recognized to
the extent there is reasonable certainty that these would be realized
in future.
Deferred tax assets, in case of unabsorbed losses and unabsorbed
depreciation, are recognized only if there is virtual certainty
supported by convincing evidence that sufficient future tax income will
be available against which such deferred tax asset can be realized.
(o) Operating Lease
Leases, where significant portion of risk and reward of ownership are
retained by the Lessor, are classified as Operating Leases and lease
rentals thereon are charged to the Statement of profit and loss on a
straight-line basis over the lease term.
(p) Cash and Cash Equivalents
Cash and Cash Equivalents for the purpose of cash flow statement
comprise cash on hand and cash at bank including fixed deposit with
original maturity period of less than three months and short term
highly liquid investments with an original maturity of three months or
less.
(q) Provisions, Contingent Liabilities and Contingent Assets
Contingent Liabilities are possible but not probable obligations as on
Balance Sheet date, based on the available evidence.
Provisions are recognised when there is a present obligation as a
result of past events, and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made.
Provisions are not discounted to its present value and are determined
based on best estimate required to settle the obligation at the Balance
Sheet date. Department appeals, in respect of cases won by the
Company, are also considered as contingent Liabilities.
Contingent Assets are neither recognized, nor disclosed.
(r) Hedge Accounting
The Company has started hedging its risk of foreign currency
fluctuations relating to receivables of highly probable forecast
transactions pertaining to Franchise income by entering into Exchange
Traded Futures (ETF's). In accordance with Company's risk mitigating
policy, it has designated these ETF's as cash flow hedge by early
application of the recognition and measurement principles set out in
the Accounting Standard 30 "Financial Instrument- Recognition and
Measurement" (AS 30) to these transactions. Accordingly, changes in the
fair value of these ETF's designated as effective hedges for the future
cash flows are recognised directly in shareholder's funds and
ineffective portion thereof is recognised directly in the ' Statement
of profit and loss'. On squaring off the complete position of such ETF
on expire, sold, terminated or no longer qualifies for hedge accounting
as on any date the gain or loss on such transactions is accounted in
statement of profit and loss.
Mar 31, 2014
Accounting Convention
(a) Basis of Preparation
The financial statements have been prepared in accordance with
generally accepted accounting principles in India (Indian GAAP) under
the historical cost convention on an accrual basis in compliance with
all material aspect of the Accounting Standard (AS) Notified by the
Companies Accounting Standard Rules, 2006 (as amended), and the
relevant provisions of the Companies Act, 1956. The accounting policies
have been consistently applied by the Company, and are consistent with
those used in the previous year, unless otherwise mentioned in the
notes.
Based on the nature of products/ services and their realization in cash
and cash equivalents, the company has ascertained its operating cycle
as twelve months for the purpose of current and non-current
classification of assets and liabilities, in terms of Revised Schedule
VI to the Companies Act, 1956.
(b) Fixed Assets
Fixed assets are stated at cost less accumulated depreciation and
impairment loss if any. Cost comprises the purchase price and any cost,
attributable to bringing the asset to its working condition for its
intended use.
Intangible assets are recognized only if it is probable that the future
economic benefits that are attributable to the asset will flow to the
enterprise and the cost of the asset can be measured reliably. The
intangible assets are recorded at cost and are carried at cost less
accumulated amortisation.
(c) Depreciation and Amortisation
Depreciation on fixed assets is provided on Straight-Line Method at the
rates and in the manner specified in the Schedule XIV of the Indian
Companies Act, 1956, except,
(i) Certain items of Plant and machinery (including computers)
installed at and used in Institutional projects and certain training
centers which are depreciated over the number of years till the
completion of the period of the contract when the assets are
transferred to those parties.
(ii) Vehicles purchased under the "Own Your Car" (OYC) scheme for the
employees, which are depreciated over the period of the scheme.
(iii) Goodwill arising on acquisition of business unit is amortised
over a period of ten years.
(iv) Depreciation on Buildings, Computer Hardware, Software ,
Courseware and Furniture & Fixtures acquired on or after 1st January
2006 is provided at the following higher rates based on its estimated
useful life -
Office Premises 3.33%
Furniture & fixtures 20.00%
Computers Hardware, Software & Courseware 33.33%
(v) Depreciation on furniture & fixtures which are installed at
leasehold premises, are amortised over lease period
(vi) Depreciation on the fixed assets added / disposed off / discarded
during the year has been provided on pro-rata basis with reference to
the date of addition / disposition / discardation
(vii) Assets purchased during the year whose acquisition cost is Rs.
5,000 or less are depreciated fully in the month of purchase.
(d) Impairment of Fixed Assets
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal/ external
factors. An asset is treated as impaired when the carrying cost of the
assets exceed its recoverable value. An impairment loss, if any, is
charged to the Statement of profit and loss in the year, in which an
asset is identified as impaired. When there is indication that an
impairment loss recognised for an assets earlier accounting periods no
longer exists or may have decreased, such reversal of impairment loss
is recognised in the Statement of Profit and Loss, except in case of
revalued assets.
(e) Borrowing Costs
Borrowing costs attributable to acquisition or construction of
qualifying assets are capitalised as a part of the cost of such assets
up to the date when such asset is ready for its intended use.
All other borrowing costs are charged to Statement of Profit and Loss
in the period in which they are incurred. Borrowing costs consist of
interest and other costs that an entity incurs in connection with the
borrowing of funds.
(f) Foreign Currency Transactions
Transactions in foreign currency are recorded at the rate of exchange
prevailing on the date of transaction. Foreign currency monetary items
are reported using closing rate of exchange at the end of the year. The
resulting exchange gain/loss is reflected in the Statement of profit
and loss. Other non-monetary items, like fixed assets, investments in
equity shares, are carried in terms of historical cost using the
exchange rate at the date of transaction.
Any Premium/discount arising at the inception of a forward exchange
contract is recognized as income/expenses over the life of the
contracts, except where the contract is designated as a cash flow
hedge. Any Profit/Loss on cancellation/renewal of forward exchange
contract is recognized as income/expense for the year.
(g) Investments
Investments which, being readily disposable and are intended to be held
for period lesser than a year are considered as ''Current'' and other
Investments are termed as ''Long Term''. Current Investments are stated
at lower of cost and fair value, determined by category of investment.
Long Term Investments are stated at cost after deducting provision, if
any, made for decline, other than temporary in the value.
(h) Inventories
Inventory of educational course material is valued at cost or net
realisable value whichever is lower. Cost is determined on Weighted
Average basis.
(i) Government Grants
Government Grants are recognized when there is reasonable assurance
that the same will be received. Revenue grants are recognized in the
Statement of profit and loss. Capital grants relating to specific fixed
assets are reduced from the gross value of the respective fixed assets.
Other capital grants are credited to capital reserve.
(j) Revenue Recognition
Revenue in respect of Training and Education services is recognised on
rendering of services, only when it is reasonably certain that the
ultimate collection will be made. The revenue from fixed time contracts
is recognized over the period of contracts. For services rendered
through franchisees only the company''s share of revenue is recognized.
Revenue in respect of sale of Education course materials is recognised
on delivery of the course materials to the customers. Dividend from
investments is recognised in the Statement of Profit and Loss, when the
right to receive payment is established. Interest Income is recognised
on a time proportion basis taking into account the amount outstanding
and applicable interest rate.
(k) Retirement Benefits
Defined Contribution plan
The Company''s makes defined contribution to Government Employee
Provident Fund, Government Employee Pension Fund, Employee Deposit
Linked Insurance, ESI and Superannuation Schemes, which are recognised
in the Statement of Profit and Loss on accrual basis.
Defined benefit plan
The Company''s liabilities under Payment of Gratuity Act (funded) and
long term compensated absences are determined on the basis of actuarial
valuation made at the end of each financial year using the projected
unit credit method except for short term compensated absences, which
are provided on estimates. Actuarial gain & losses are recognized
immediately in the statement of profit and loss as income or expenses.
Obligation is measured at the present value of estimated future cash
flows using the discounted rate that is determined by reference to
market yields at the Balance Sheet date on government bonds where the
currency and terms of the government bonds are consistent with the
currency and estimated terms of the defined benefit obligation
(l) Employees Stock Option Plan ( ESOP)
The stock options granted are accounted for as per the accounting
treatment prescribed by Employee Stock option Scheme and Employee Stock
Purchase Guidelines, 1999, issued by Securities and Exchange Board of
India, whereby the intrinsic value of the option is recognized as
deferred employee compensation. The deferred employee compensation is
charged to Statement of profit and loss on straight line basis over the
vesting period of the option. The options that lapse are reversed by a
credit to employee compensation expense, to the extent of the amortised
portion of value of lapsed portion. The costs incurred on account of
ESOP granted to employees of subsidiary companies are recovered from
the subsidiaries. The Employee Stock Option Account (share option
outstanding account), net of any unamortised deferred employee
compensation is shown separately as part of reserves.
(m) Income Tax
Tax expense comprises of current, wealth and deferred tax.
Provision for current tax is made on the basis of estimated taxable
income for the current accounting year in accordance with the Income
Tax Act, 1961.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for, using the tax rates and laws
that have been substantively enacted as of the Balance Sheet Date.
Deferred tax assets arising from timing differences are recognized to
the extent there is reasonable certainty that these would be realized
in future.
Deferred tax assets, in case of unabsorbed losses and unabsorbed
depreciation, are recognized only if there is virtual certainty
supported by convincing evidence that sufficient future tax income will
be available against which such deferred tax asset can be realized.
(n) Operating Lease
Leases, where significant portion of risk and reward of ownership are
retained by the Lessor, are classified as Operating Leases and lease
rentals thereon are charged to the Statement of profit and loss on a
straight-line basis over the lease term.
(o) Cash and Cash Equivalents
Cash and Cash Equivalents for the purpose of cash flow statement
comprise cash on hand and cash at bank including fixed deposit with
original maturity period of less than three months and short term
highly liquid investments with an original maturity of three months or
less.
(p) Provisions, Contingent Liabilities and Contingent Assets
Contingent Liabilities are possible but not probable obligations as on
Balance Sheet date, based on the available evidence.
Provisions are recognised when there is a present obligation as a
result of past events, and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made.
Provisions are not discounted to its present value and are determined
based on best estimate required to settle the obligation at the Balance
Sheet date.
Department appeals, in respect of cases won by the Company, are also
considered as contingent Liabilities.
Contingent Assets are neither recognized, nor disclosed.
(q) Hedge Accounting
The Company has started hedging its risk of foreign currency
fluctuations relating to receivables of highly probable forecast
transactions pertaining to Franchise income by entering into Exchange
Traded Futures (ETF''s). In accordance with Company''s risk mitigating
policy, it has designated these ETF"s as cash flow hedge by early
application of the recognition and measurement principles set out in
the Accounting Standard 30 "Financial Instrument-Recognition and
Measurement" (AS30) to these transactions. Accordingly, changes in the
fair value of these ETF''s designated as effective hedges for the future
cash flows are recognised directly in shareholder''s funds and
ineffective portion thereof is recognised directly in the '' Statement
of profit and loss''. On squaring off the complete position of such ETF
on expire, sold, terminated or no longer qualifies for hedge accounting
as on any date the gain or loss on such transactions is accounted in
statement of profit and loss.
Mar 31, 2013
(a) Basis of Preparation
The financial statements have been prepared in accordance with
generally accepted accounting principles in India (Indian GAAP) under
the historical cost convention on an accrual basis in compliance with
all material aspect of the Accounting Standard (AS) Notified by the
Companies Accounting Standard Rules, 2006 (as amended), and the
relevant provisions of the Companies Act, 1956. The accounting policies
have been consistently applied by the Company, and are consistent with
those used in the previous year, unless otherwise mentioned in the
notes.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Revised Schedule VI to the Companies Act, 1956.
Based on the nature of products and their realisation in cash and cash
equivalents, the Company has ascertained its operating cycle as up to
twelve months for the purpose of current and non-current classification
of assets and liabilities.
(b) Fixed Assets
Fixed assets are stated at cost less accumulated depreciation and
impairment loss if any. Cost comprises the purchase price and any cost,
attributable to bringing the asset to its working condition for its
intended use.
Intangible assets are recognized only if it is probable that the future
economic benefits that are attributable to the asset will flow to the
enterprise and the cost of the asset can be measured reliably. The
intangible assets are recorded at cost and are carried at cost less
accumulated amortisation.
(c) Depreciation and Amortisation
Depreciation on fixed assets is provided on Straight-Line Method at the
rates and in the manner specified in the Schedule XIV of the Indian
Companies Act, 1956, except,
(i) Certain items of Plant and machinery (including computers)
installed at and used in Institutional projects and certain training
centers which are depreciated over the number of years till the
completion of the period of the contract when the assets are
transferred to those parties.
(ii) Vehicles purchased under the "Own Your Car" (OYC) scheme for the
employees, which are depreciated over the period of the scheme.
(iii) Goodwill arising on acquisition of business unit is amortised
over a period of ten years.
(iv) Depreciation on Buildings, Computer Hardware, Software ,
Courseware and Furniture & Fixtures acquired on or after 1st January
2006 is provided at the following higher rates based on its estimated
useful life Â
Office Premises 3.33%
Furniture & fixtures 20.00%
Computers Hardware, Software & Courseware 33.33%
(v) Depreciation on furniture & fixtures which are installed at
leasehold premises, are amortised over lease period
(vi) Depreciation on the fixed assets added / disposed off / discarded
during the year has been provided on pro-rata basis with reference to
the date of addition / disposition / discardation
(vii) Assets purchased during the year whose acquisition cost is Rs.
5,000 or less are depreciated fully in the month of purchase.
(d) Impairment of Fixed Assets
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal/external
factors. An asset is treated as impaired when the carrying cost of the
assets exceed its recoverable value. An impairment loss, if any, is
charged to the Statement of profit and loss in the year, in which an
asset is identified as impaired. When there is indication that an
impairment loss recognised for an assets earlier accounting periods no
longer exists or may have decreased, such reversal of impairment loss
is recognised in the Statement of Profit and Loss, except in case of
revalued assets.
(e) Borrowing Costs
Borrowing costs attributable to acquisition or construction of
qualifying assets are capitalised as a part of the cost of such assets
up to the date when such asset is ready for its intended use.
All other borrowing costs are charged to Statement of Profit and Loss
in the period in which they are incurred. Borrowing costs consist of
interest and other costs that an entity incurs in connection with the
borrowing of funds.
(f) Foreign Currency Transactions
Transactions in foreign currency are recorded at the rate of exchange
prevailing on the date of transaction. Foreign currency monetary items
are reported using closing rate of exchange at the end of the year. The
resulting exchange gain/loss is reflected in the Statement of profit
and loss. Other non-monetary items, like fixed assets, investments in
equity shares, are carried in terms of historical cost using the
exchange rate at the date of transaction.
Any Premium/discount arising at the inception of a forward exchange
contract is recognized as income/expenses over the life of the
contracts, except where the contract is designated as a cash flow
hedge. Any Profit/Loss on cancellation/renewal of forward exchange
contract is recognized as income/expense for the year.
(g) Investments
Investments which, being readily disposable and are intended to be held
for period lesser than a year are considered as ÂCurrent'' and other
Investments are termed as ÂLong Term''. Current Investments are stated
at lower of cost and fair value, determined by category of investment.
Long Term Investments are stated at cost after deducting provision, if
any, made for decline, other than temporary in the value.
(h) Inventories
Inventory of educational course material is valued at cost or net
realisable value whichever is lower. Cost is determined on Weighted
Average basis.
(i) Government Grants
Government Grants are recognized when there is reasonable assurance
that the same will be received. Revenue grants are recognized in the
Statement of profit and loss. Capital grants relating to specific fixed
assets are reduced from the gross value of the respective fixed assets.
Other capital grants are credited to capital reserve.
(j) Revenue Recognition
Revenue in respect of Training and Education services is recognised on
rendering of services, only when it is reasonably certain that the
ultimate collection will be made. The revenue from fixed time contracts
is recognized over the period of contracts. For services rendered
through franchisees only the company''s share of revenue is recognized.
Revenue in respect of sale of Education course materials is recognised
on delivery of the course materials to the customers.
Dividend from investments is recognised in the Statement of Profit and
Loss, when the right to receive payment is established.
Interest Income is recognised on a time proportion basis taking into
account the amount outstanding and applicable interest rate.
(k) Retirement Benefits
Defined Contribution plan
The Company''s makes defined contribution to Government Employee
Provident Fund, Government Employee Pension Fund, Employee Deposit
Linked Insurance, ESI and Superannuation Schemes, which are recognised
in the Statement of Profit and Loss on accrual basis.
Defined benefit plan
The Company''s liabilities under Payment of Gratuity Act (funded) and
long term compensated absences are determined on the basis of actuarial
valuation made at the end of each financial year using the projected
unit credit method except for short term compensated absences, which
are provided on estimates. Actuarial gain & losses are recognized
immediately in the statement of profit and loss as income or expenses.
Obligation is measured at the present value of estimated future cash
flows using the discounted rate that is determined by reference to
market yields at the Balance Sheet date on government bonds where the
currency and terms of the government bonds are consistent with the
currency and estimated terms of the defined benefit obligation.
(l) Employees Stock Option Plan ( ESOP)
The stock options granted are accounted for as per the accounting
treatment prescribed by Employee Stock option Scheme and Employee Stock
Purchase Guidelines, 1999, issued by Securities and Exchange Board of
India, whereby the intrinsic value of the option is recognized as
deferred employee compensation. The deferred employee compensation is
charged to Statement of profit and loss on straight line basis over the
vesting period of the option. The options that lapse are reversed by a
credit to employee compensation expense, to the extent of the amortised
portion of value of lapsed portion. The costs incurred on account of
ESOP granted to employees of subsidiary companies are recovered from
the subsidiaries. The Employee Stock Option Account (share option
outstanding account), net of any unamortised deferred employee
compensation is shown separately as part of reserves.
(m) Income Tax
Tax expense comprises of current, wealth and deferred tax.
Provision for current tax is made on the basis of estimated taxable
income for the current accounting year in accordance with the Income
Tax Act, 1961.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for, using the tax rates and laws
that have been substantively enacted as of the Balance Sheet Date.
Deferred tax assets arising from timing differences are recognized to
the extent there is reasonable certainty that these would be realized
in future.
Deferred tax assets, in case of unabsorbed losses and unabsorbed
depreciation, are recognized only if there is virtual certainty
supported by convincing evidence that sufficient future tax income will
be available against which such deferred tax asset can be realized.
(n) Operating Lease
Leases, where significant portion of risk and reward of ownership are
retained by the Lessor, are classified as Operating Leases and lease
rentals thereon are charged to the Statement of profit and loss on a
straight-line basis over the lease term.
(o) Cash and Cash Equivalents
Cash and Cash Equivalents for the purpose of cash flow statement
comprise cash on hand and cash at bank including fixed deposit with
original maturity period of less than three months and short term
highly liquid investments with an original maturity of three months or
less.
(p) Provisions, Contingent Liabilities and Contingent Assets
Contingent Liabilities are possible but not probable obligations as on
Balance Sheet date, based on the available evidence.
Provisions are recognised when there is a present obligation as a
result of past events, and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made.
Provisions are not discounted to its present value and are determined
based on best estimate required to settle the obligation at the Balance
Sheet date.
Department appeals, in respect of cases won by the Company, are also
considered as contingent Liabilities.
Contingent Assets are neither recognized, nor disclosed.
(q) Hedge Accounting
The Company has started hedging its risk of foreign currency
fluctuations relating to receivables of highly probable forecast
transactions pertaining to Franchise income by entering into Exchange
Traded Futures (ETF''s). In accordance with Company''s risk mitigating
policy, it has designated these ETF"s as cash flow hedge by early
application of the recognition and measurement principles set out in
the Accounting Standard 30 "Financial Instrument-Recognition and
Measurement" (AS30) to these transactions. Accordingly, changes in the
fair value of these ETF''s designated as effective hedges for the future
cash flows are recognised directly in shareholder''s funds and
ineffective portion thereof is recognised directly in the  Statement
of profit and loss''. On squaring off the complete position of such ETF
on expire, sold, terminated or no longer qualifies for hedge accounting
as on any date the gain or loss on such transactions is accounted in
statement of profit and loss.
Mar 31, 2012
(a) ACCOUNTING CONVENTION:
The financial statements are prepared under the historical cost
convention, on an accrual basis in compliance with all material aspects
of the applicable accounting standards in India and the relevant
provisions of the Companies Act, 1956. The accounting policies have
been consistently applied by the company and are consistent with those
used in the previous year, unless otherwise mentioned in the notes.
(b) FIXED ASSETS:
Fixed assets are stated at cost less accumulated depreciation and
impairment loss if any. Cost comprises the purchase price and any cost,
attributable to bringing the asset to its working condition for its
intended use.
Intangible assets are recognized only if it is probable that the future
economic benefits that are attributable to the asset will flow to the
enterprise and the cost of the asset can be measured reliably. The
intangible assets are recorded at cost and are carried at cost less
accumulated amortisation.
(c) DEPRECIATION AND AMORTISATION:
Depreciation on fixed assets is provided on Straight-Line Method at the
rates and in the manner specified in the Schedule XIV of the Indian
Companies Act, 1956, except,
(i) Certain items of Plant and machinery (including computers)
installed at and used in Institutional projects and certain training
centers which are depreciated over the number of years till the
completion of the period of the contract when the assets are
transferred to those parties.
(ii) Vehicles purchased under the "Own Your Car" (OYC) scheme for the
employees, which are depreciated over the period of the scheme.
Goodwill arising on acquisition of business unit is amortised over a
period of ten years.
Depreciation on Buildings, Computer Hardware, Software , Courseware and
Furniture & Fixtures acquired on or after 1st January 2006 is provided
at the following higher rates based on its estimated useful life -
Office Premises 3.33%
Furniture & fixtures 20.00%
Computers Hardware,
Software & Courseware 33.33%
Depreciation on furniture & fixtures which are installed at leasehold
premises, are amortised over lease period
Depreciation on the fixed assets added / disposed off / discarded
during the year has been provided on pro-rata basis with reference to
the date of addition / disposition / discardation
Assets purchased during the year whose acquisition cost is Rs 5,000 or
less are depreciated fully in the month of purchase.
(d) IMPAIRMENT OF FIXED ASSETS:
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal/external
factors. An asset is treated as impaired when the carrying cost of the
assets exceed its recoverable value. An impairment loss, if any, is
charged to the Statement of profit and loss in the year, in which an
asset is identified as impaired. Reversal of impairment losses
recognised in prior years is recorded when there is an indication that
the impairment losses recognised for the assets no longer exist or have
decreased.
(e) BORROWING COSTS:
Borrowing costs attributable to acquisition or construction of
qualifying assets are capitalised as a part of the cost of such assets
up to the date when such asset is ready for its intended use.
Other borrowing costs are charged to revenue.
(f) FOREIGN CURRENCY TRANSACTIONS:
Transaction in foreign currency are recorded at the rate of exchange
prevailing on the date of transaction. Foreign currency monetary items
are reported using closing rate of exchange at the end of the year. The
resulting exchange gain/loss is reflected in the Statement of profit
and loss. Other non-monetary items, like fixed assets, investments in
equity shares, are carried in terms of historical cost using the
exchange rate at the date of transaction. Premium/discount, in respect
of forward exchange contract is recognized over the life of the
contracts. Profit/Loss on cancellation/renewal of forward exchange
contract is recognized as income/expense for the year.
(g) INVESTMENTS:
Long Term Investments are stated at cost after deducting provision, if
any, made for decline, other than temporary in the value. Current
Investments are stated at lower of cost and market/fair value.
(h) INVENTORIES:
Inventory of educational course material is valued at cost or net
realisable value whichever is lower. Cost is determined on Weighted
Average basis.
(i) GOVERNMENT GRANTS:
Government Grants are recognized when there is reasonable assurance
that the same will be received. Revenue grants are recognized in the
Statement of profit and loss. Capital grants relating to specific fixed
assets are reduced from the gross value of the respective fixed assets.
Other capital grants are credited to capital reserve.
(j) REVENUE RECOGNITION: i) Training and Education Income
Revenue in respect of Training and Education services is recognised on
rendering of services, only when it is reasonably certain that the
ultimate collection will be made. The revenue from fixed time contracts
is recognized over the period of contracts. For services rendered
through franchisees only the company's share of revenue is recognized.
ii) Sale of Education Course Materials
Revenue in respect of sale of Education course materials is recognised
on delivery of the course materials to the customers.
iii) Dividend
Dividend income is accounted for when the right to receive the payment
is established.
iv) Interest
Interest income is recognised on accrual basis.
(k) RETIREMENT BENEFITS: DEFINED CONTRIBUTION PLAN
The Company makes defined contribution to Provident fund and
Superannuation Scheme which are recognized in the statement of profit
and loss on accrual basis.
DEFINED BENEFIT PLAN
The company's liabilities under Payment of Gratuity Act (funded) and
long term compensated absences are determined on the basis of actuarial
valuation made at the end of each financial year using the projected
unit credit method except for short term compensated absences, which
are provided on estimates. Actuarial gain & losses are recognized
immediately in the statement of statement of profit and loss as income
or expenses. Obligation is measured at the present value of estimated
future cash flows using the discounted rate that is determined by
reference to market yields at the balance sheet date on government
bonds where the currency and terms of the government bonds are
consistent with the currency and estimated terms of the defined benefit
obligation
(l) EMPLOYEES STOCK OPTION PLAN (ESOP)
The stock options granted are accounted for as per the accounting
treatment prescribed by Employee Stock option Scheme and Employee Stock
Purchase Guidelines, 1999, issued by Securities and Exchange Board of
India, whereby the intrinsic value of the option is recognized as
deferred employee compensation. The deferred employee compensation is
charged to Statement of profit and loss on straight line basis over the
vesting period of the option. The options that lapse are reversed by a
credit to employee compensation expense, to the extent of the amortised
portion of value of lapsed portion. The costs incurred on account of
ESOP granted to employees of subsidiary companies are recovered from
the subsidiaries. The Employee Stock Option Account (share option
outstanding account), net of any unamortised deferred employee
compensation is shown separately as part of reserves.
(m) INCOME TAX:
Tax expense comprises of current, deferred and Fringe benefits tax.
Provision for current tax is made on the basis of estimated taxable
income for the current accounting year in accordance with the Income
tax Act,1961.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for, using the tax rates and laws
that have been substantively enacted as of the Balance Sheet Date.
Deferred tax assets arising from timing differences are recognized to
the extent there is reasonable certainty that these would be realized
in future.
Deferred tax assets, in case of unabsorbed losses and unabsorbed
depreciation, are recognized only if there is virtual certainty that
such deferred tax asset can be realized against future taxable profits.
Fringe Benefit Tax is provided in accordance with the provisions of the
Income Tax Act, 1961.
(n) OPERATING LEASE:
Leases, where significant portion of risk and reward of ownership are
retained by the Lessor, are classified as Operating Leases and lease
rentals thereon are charged to the Statement of profit and loss.
(o) PROVISIONS, CONTINGENT LIABILITIES AND CONTIGENT ASSETS
A provision is recognised when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made.
Provisions are not discounted to its present value and are determined
based on best estimate required to settle the obligation at the balance
sheet date.
Reimbursement expected in respect of expenditure required to settle a
provision is recognised only when it is virtually certain that the
reimbursement will be received.
Contingent liabilities are possible but not probable obligations as on
the Balance Sheet date, based on the available evidence. Department
appeals, in respect of cases won by the company, are also considered as
contingent Liabilities.
Contingent Assets are neither recognized, nor disclosed.
(p) HEDGE ACCOUNTING
The company has started hedging its risk of foreign currency
fluctuations relating to receivables of highly probable forecast
transactions pertaining to Franchise income by entering into Exchange
Traded Futures (ETF's). In accordance with Company's risk mitigating
policy, it has designated these ETF"s as cash flow hedge by early
application of the recognition and measurement principles set out in
the Accounting Standard 30 "Financial Instrument-Recognition and
Measurement" (AS30) to these transactions. Accordingly, changes in the
fair value of these ETF's designated as effective hedges for the future
cash flows are recognised directly in shareholder's funds and
ineffective portion thereof is recognised directly in the ' Statement
of profit and loss'. On squaring off the complete position of such ETF
on expire, sold, terminated or no longer qualifies for hedge accounting
as on any date the gain or loss on such transactions is accounted in
Statement of statement of profit and loss.
Mar 31, 2011
(a) Accounting Convention
The Consolidated Financial Statements (CFS) comprises the financial
statement of Aptech Limited, ("the Company") and its Subsidiaries,
Joint Ventures and Associate (hereinafter collectively referred to as
the "the Group") are prepared under the historical cost convention, on
an accrual basis in compliance with all material aspects of the
applicable accounting standards in India and in accordance with the
requirements of the Companies Act, 1956. The accounting policies have
been consistently applied by the Company and are consistent with those
used in the previous year, unless otherwise mentioned in the notes. In
case of ACE EDUCACAO PROFISSIONAL do BRASIL S.A. (BRAZIL S.A) the
accounts are made in accordance with Brazilian Accounting Practices
(Brazil AP) which was converted by management as per Indian Generally
Accepted Accounting Principles (Indian GAAP).
(b) Accounting Estimates/Assumptions
The preparation of financial statements in conformity with generally
accepted accounting principles requires the management of the Group to
make estimates and assumptions that affect the reported amount of
assets and liabilities and disclosure relating to the contingent
liabilities as at the date of the financial statements and reported
amounts of income and expenses during the year. Although, these
estimates/assumptions are based upon managements best knowledge of
current events and actions, actual results could differ from these
estimates.
(c) Principles of consolidation
i) The financials statements of the Aptech Limited and its subsidiary
companies have been combined on a line-by-line basis by adding together
the book values of like items of assets, liabilities, income and
expenses, after eliminating intra-group balances and transactions as
per Accounting Standard (AS) 21 "Consolidated Financial Statements".
ii) Interests in Joint controlled entities, where the Company is direct
venture, are accounted using the proportionate consolidation method as
per AS 27 Ã "Financial Reporting of Interests in Joint Ventures".
iii) The CFS include the share of profit/loss of associate companies,
which are accounted under the Equity method in accordance with AS-23
"Accounting for Investments in Associates in Consolidated Financial
Statements" as per which the share of profit of the associate company
has been added to the cost of investment. An associate is an enterprise
in which the investor has significant influence and which is neither a
subsidiary nor a joint venture.
iv) The excess/deficit of cost to the Company of its investment in
subsidiary companies over its share of the net worth in the
consolidated entities at the respective dates on which the investment
in such entities are made is recognised in the CFS as goodwill/capital
reserve.
v) Entities acquired during the year have been consolidated from the
respective dates of their acquisition unless otherwise mentioned in the
notes.
vi) The CFS are prepared by using uniform accounting policies for like
transactions and other events in similar circumstances and necessary
adjustments required for deviations, if any to the extent possible, are
made in the CFS and are presented in the same manner as the Companys
separate financial statements except otherwise stated elsewhere in this
schedule. However, since certain subsidiaries/joint ventures which
function in a different countries and have different regulatory
environment, certain accounting policies differ in accordance with GAAP
of the respective countries.
vii) Translation of foreign subsidiary is done in accordance with ASÃ11
(Revised) "The Effects of Changes in Foreign Exchange Rates". In case
of foreign subsidiaries and joint ventures the financial statements
have been translated into Indian rupees. The Assets and liabilities
which are non integral have been translated at closing rate. The income
and expenditure items have been translated at the average rate for the
year. Resulting Exchange difference are accumulated in the foreign
currency translation reserve account until the disposal of the
investment.
viii) In case of foreign subsidiaries which are integral the foreign
exchange transaction is recorded at the rate of exchange prevailing on
the date of transaction. Current assets and liabilities are translated
at the year-end closing rates. The resulting exchange gain/loss is
reflected in the profit and loss account.
ix) Minority interest in the net assets of consolidated subsidiaries
consists of the amount of equity attributable to the minority
shareholders at the dates on which investments are made by the group in
the subsidiary companies and further movements in their share in the
equity, subsequent to the dates of investments.
x) The list of entities included in CFS is mentioned in Note B.1
(d) Fixed Assets
Fixed assets are stated at cost less accumulated depreciation and
impairment loss if any. Cost comprises the purchase price and any cost,
attributable to bringing the asset to its working condition for its
intended use.
Intangible assets are recognized only if it is probable that the future
economic benefits that are attributable to the asset will flow to the
enterprise and the cost of the asset can be measured reliably. The
intangible assets are recorded at cost and are carried at cost less
accumulated amortization.
(e) Depreciation and Amortisation
Depreciation on fixed assets is provided on Straight-Line Method at the
rates and in the manner specified in the Schedule XIV of the Indian
Companies Act, 1956, except,
a) Certain items of plant and machinery (including computers) installed
at and used in institutional projects, which are depreciated over the
number of years till the completion of the period of the contract when
the assets are transferred to those parties.
b) Vehicles purchased under the "Own Your Car" (OYC) scheme for the
employees, which are depreciated over the period of the scheme.
c) Goodwill arising on acquisition of business unit is amortised over a
period of ten years.
d) Depreciation on Buildings, Computer Hardware, Software, courseware
and Furniture & Fixtures acquired on or after 1st January, 2006 is
provided at the following rates based on estimated useful life Ã
Office Premises 3.33%
Furniture & fixtures 20.00%
Computers Hardware, Software and Courseware 33.33%
e) Depreciation on furniture and fixtures, which are installed at
leasehold premises, are amortised over lease period
f) Depreciation on the fixed assets added/disposed off/discarded during
the year has been provided on pro-rata basis with reference to the date
of addition/disposition/discardation.
g) Assets purchased during the year whose acquisition cost is Rs. 5000 or
less are depreciated fully in the month of purchase.
h) The method/rates of depreciation which are different other than
above, followed by any entities, if any, are disclosed by way of notes
to accounts.
(f) Impairment of Fixed Assets
At each balance sheet date, the management reviews the carrying amounts
of its assets to determine whether there is any indication that those
assets were impaired. If any such indication exists, an asset is
treated as impaired when the carrying cost of the assets exceed its
recoverable value. An impairment loss, if any, is charged to the Profit
and Loss Account in the year, in which an asset is identified as
impaired. Reversal of impairment losses recognised in prior years is
recorded when there is an indication that the impairment losses
recognised for the assets no longer exist or have decreased.
(g) Borrowing Costs
Borrowing costs attributable to acquisition or construction of
qualifying assets are capitalised as a part of the cost of such assets
up to the date when such asset is ready for its intended use. All other
borrowing costs are charged to Profit and Loss account in the period
they occur. Borrowing costs consist of interest and other costs that an
entity incurs in connection with the borrowing of funds.
(h) Foreign Currency Transactions
Transactions in foreign currency are recorded at the rate of exchange
prevailing on the date of transaction. Foreign currency monetary items
are reported using closing rate of exchange at the end of the year. The
resulting exchange gain/loss is reflected in the Profit and Loss
Account. Other non-monetary items, like fixed assets, investments in
equity shares, are carried in terms of historical cost using the
exchange rate at the date of transaction. Premium/discount, in respect
of forward exchange contract is recognized over the life of the
contracts. Profit/Loss on cancellation/renewal of forward exchange
contract is recognized as income/expense for the year.
(i) Investments
Investments are classified into Current and LongÃterm Investments.
Investments which, being readily disposable and are intended to be held
for period lesser than a year are considered as Current and other
Investments are termed as Long Term. Current Investments are stated
at lower of cost and fair value.
Long Term Investments are stated at cost after deducting provision, if
any, for diminution in value considered being other than temporary in
nature.
(j) Inventories
Inventory is valued at cost or net realizable value whichever is lower.
Inventory containing self developed animation films are capitalized.
Cost comprise of attributable direct cost and overheads. Cost incurred
on the projects which are not completed is inventorised to the extent
work is completed or is to be exploited for commercial purpose. Cost is
determined on a weighted Average basis.
(k) Derivative instruments and hedge accounting
The Company has started hedging its risk of foreign currency
fluctuations relating to receivables of highly probable forecast
transactions pertaining to franchise income by entering into Exchange
Traded Futures (ETFs). In accordance with Companys risk mitigating
policy, it has designated these ETFs as cash flow hedge by early
application of the recognition and measurement principles set out in
the Accounting Standard 30 "Financial Instrument- Recognition and
Measurement" (AS-30) to these transactions. Accordingly, changes in the
fair value of these ETFs designated as effective hedges for the future
cash flows are recognised directly in shareholders funds and
ineffective portion thereof is recognised directly in the Profit and
Loss Account. The Group designates these hedging instruments as cash
flow hedge applying the recognition and measurement principles set out
in the AS-30.
As per the ICAI Announcement, accounting for derivative contracts,
other than those covered under AS-11, are marked to market on a
portfolio basis, and the net loss after considering the offsetting
effect on the underlying hedge item is charged to the profit and loss
account. Net gains are ignored.
(l) Government Grants
Government Grants are recognized when there is reasonable assurance
that the Group will comply with the condition attaching to them and the
grants will be received. Revenue grants are recognized in the Profit
and Loss Account. Capital grants relating to specific fixed assets are
reduced from the gross value of the respective fixed assets. Other
capital grants are credited to capital reserve.
(m) Revenue Recognition
a) Training and Education Income
Revenue in respect of Training and Education services is recognised on
rendering of services, only when it is reasonably certain that the
ultimate collection will be made. The revenue from fixed time contracts
is recognized over the period of contracts or as per terms of the
contract. For services rendered through franchisees only the Companys
share of revenue is recognized as per the terms of the contract. For
the centres owned by the Company, the income is recognised over the
period of provision of services to the students.
Income from training courses in advance cinematic (including share of
Franchisee Operation) is accounted on accrual basis. Franchisee
(including master franchisee) share of fees are booked as expense.
Income from student fees is accounted over the tenure of course. Dues,
remaining outstanding from the students for the period of six months,
if any, are derecognized as revenue.
b) Sale of Education Course Materials
Revenue in respect of sale of Education course materials is recognised
on delivery of the course materials to the customers.
c) Sale of Films
Revenue on Self Developed Intellectual Property is recognised in the
financial year in which the Intellectual Property is commercially
exploited.
d) Dividend
Dividend income is accounted for when the right to receive the payment
is established.
e) Interest
Interest income is recognised on time proportion basis taking into
account the amount outstanding and the rate applicable.
(n) Retirement Benefits
i. Defined Contribution plan
The Group makes defined contribution to Provident Fund and
Superannuation Fund contribution to defined contribution retirement
benefits plans for qualifying employees. Under the schemes, the Group
are required to contribute a specified percentage of the payroll costs
to fund the benefits. Defined contribution benefits are recognized as
an expense at the undisclosed amount in the profit and loss account of
the year in which the related service is rendered.
ii. Defined benefit plan
The Companys liabilities under Payment of Gratuity Act (funded) and
long-term compensated absences are determined on the basis of actuarial
valuation made at the end of each financial year using the projected
unit credit method except for short term compensated absences, which
are provided on estimates. Actuarial gain and losses are recognized
immediately in the statement of profit and Loss account as income or
expenses. Obligation is measured at the present value of estimated
future cash flows using the discounted rate that is determined by
reference to market yields at the balance sheet date on government
bonds where the currency and terms of the government bonds are
consistent with the currency and estimated terms of the defined benefit
obligation.
(o) Employees Stock Option Plan ( ESOP)
In respect of the stock option granted to employees pursuant to the
Companys stock option schemes, accounting is done as per the intrinsic
value method permitting by the SEBI guideline, 1999 and the Guidance
Note on Share Based Payment issued by the ICAI, whereby the intrinsic
value of the option is recognized as deferred employee compensation.
The deferred employee compensation is charged to Profit and Loss
Account on straight line basis over the vesting period of the option.
The options that lapse are reversed by a credit to employee
compensation expense, to the extent of the amortised portion of value
of lapsed portion. The costs incurred on account of ESOP granted to
employees of subsidiary companies are recovered from the subsidiaries.
(p) Income Tax
i) Ta x expense comprises of current and deferred tax.
ii) Provision for current tax is made on the basis of estimated taxable
income for the current accounting year in accordance with the Income
tax Act, 1961.
iii) The deferred tax for timing differences between the book and tax
profits for the year is accounted for, using the tax rates and laws
that have been substantively enacted as of the Balance Sheet Date.
Deferred tax assets arising from timing differences are recognized to
the extent there is reasonable certainty that these would be realized
in future.
iv) The Deferred tax is measured based on the tax rates and the tax
laws enacted or substantively enacted at the balance sheet date.
Deferred tax assets and deferred tax liabilities are offset, if a
legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognised only to the extent
that there is reasonable certainty that sufficient future taxable
income will be available against which such deferred tax assets can be
realised. In situations where the company has unabsorbed depreciation
or carry forward tax losses, all deferred tax assets are recognised
only if there is virtual certainty supported by convincing evidence
that they can be realised against future taxable profits. Deferred tax
assets in case of China operations are recognised at appropriate tax
rates based on reasonable certainty.
At each balance sheet date the Companies in the Group re-assesses
unrecognised deferred tax assets. It recognises unrecognised deferred
tax assets to the extent that it has become reasonably certain or
virtually certain, as the case may be that sufficient future taxable
income will be available against which such deferred tax assets can be
realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Companies in the Group writes-down the carrying amount
of a deferred tax asset to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that sufficient
future taxable income will be available against which deferred tax
asset can be realised. Any such write-down is reversed to the extent
that it becomes reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available.
v) Minimum alternative tax (MAT) paid in accordance to the tax laws,
which gives rise to future economic benefits in the form of adjustments
of future income tax liability, is considered as an asset if there is
convincing evidences that the group will pay
normal income tax after the tax holiday period. Accordingly, MAT is
recognised as an asset in the balance sheet when it is probable that
the future economic benefits associated with it will flow to the Group
and the asset can be measured reliably.
(q) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
(r) Operating Lease
Leases arrangements, where the risks and rewards incidental to
ownership of an asset substantially vests with the lessor, are
recognised as operating leases and lease rentals thereon are recognised
in the profit and loss account on a straight-line basis.
(s) Segment Reporting Policies
i) Identification of segments
The Groups has disclosed Business Segment as the primary segment.
Segments have been identified taking into account the nature of the
products and services provided, the differing risks and returns, the
organization structure and internal reporting system.
The Groups has identified geographical markets as the secondary
segments. Geographical revenues are allocated based on the location of
the customer. The analysis of geographical segments is based on the
areas in which major operating divisions of the Group operate.
ii) Inter segment Transfers
The Group generally accounts for intersegment sales and transfers as if
the sales or transfers were to third parties at current market prices.
iii) Allocation of Income and expenses
Income and expenses directly attributable to segments are reported
under each reportable segment. Common expenses which are not directly
identifiable to each reporting segment have been allocated to each
reporting segment on the basis of relative contribution of each segment
to the total common costs.
All other income and expenses which are not attributable or allocable
to segments have been disclosed as unallocable items.
iv) Allocation of Assets and liabilities
Assets and liabilities that are directly attributable to segments are
disclosed under each reportable segment. All other assets and
liabilities are disclosed as unallocable.
(t) Provisions, Contingent Liabilities and Contingent Assets
i) A provision is recognised when an enterprise has a present
obligation as a result of past event and it is probable that an outflow
of resources will be required to settle the obligation, in respect of
which a reliable estimate can be made.
ii) Provisions (excluding retirement benefits) are not discounted to
its present value and are determined based on best estimate required to
settle the obligation at the balance sheet date.
iii) Reimbursement expected in respect of expenditure required to
settle a provision is recognised only when it is virtually certain that
the reimbursement will be received.
iv) Contingent liabilities are possible but not probable obligations as
on the balance sheet date, based on the available evidence.
v) Department appeals, in respect of cases won by the Company, are also
considered as contingent Liabilities.
vi) Contingent Assets are neither recognised, nor disclosed in the
financial statements.
vii) Provisions, Contingent Liabilities and Contingent Assets are
reviewed at each balance sheet date and adjusted to reflect the current
best estimates.
Mar 31, 2010
(a) ACCOUNTING CONVENTION:
The Consolidated Financial Statements (CFS) comprises the financial
statement of Aptech Ltd ("the Company") and its Subsidiaries, Joint
Ventures and Associates (herein after collectively referred to as
"Group Companies" and together as "Group"). The financial statements
have been prepared to comply in all material respects with the
Accounting Standards notified by Companies (Accounting Standards)
Rules, 2006, (as amended) and the relevant provisions of the Companies
Act, 1956. The financial statements have been prepared under the
historical cost convention on an accrual basis. The accounting policies
have been consistently applied by the Group and are consistent with
those used in the previous year, unless otherwise mentioned in the
notes. In case of BEIJING APTECH BEIDA JADE BIRD INFORMATION TECHNOLOGY
CO., LTD. (China JV) the accounts are made in accordance with United
States (U.S) Generally Accepted Accounting Principles (GAAP) (US GAAP)
and In case of ACE Educacao Profissional do Brasil S.A (BRAZIL S.A) the
accounts are made in accordance with Brazilian Accounting Practices
(Brazil AP) which was converted by management as per Indian Generally
Accepted Accounting Principles (Indian GAAP).
(b) USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon managements best
knowledge of current events and actions, actual results could differ
from these estimates.
(c) PRINCIPLES OF CONSOLIDATION:
The CFS have been prepared in accordance with Accounting Standard 21
"Consolidated Financial Statements" (AS 21) and Accounting Standard 27
"Financial reporting of interests in Joint Ventures" (AS 27) and are
prepared on the following basis:
The financial statements of the Company and its subsidiary companies
have been combined on a line-by-line basis by adding together the book
values of like items of assets, liabilities, income and expenses, after
eliminating intra-group balances and transactions as per AS 21.
Interest in jointly controlled entities, where the Company is direct
venturer, are accounted for using proportionate consolidation in
accordance with AS 27. The difference between cost of the Companys
interest in jointly controlled entities over its share of net assets in
the jointly controlled entities, at the date on which interest is
acquired, is recognised in the CFS as Goodwill or Capital Reserve as
the case may be.
The excess/deficit of cost to the Company of its investment over its
portion of net worth in the consolidated entities at the respective
dates on which the investment in such entities was made is recognised
in the Consolidated Financial Statements as goodwill/capital reserve.
Entities acquired during the year have been consolidated from the
respective dates of their acquisition unless otherwise mentioned in the
notes.
The CFS are prepared by using uniform accounting policies for like
transactions and other events in similar circumstances and necessary
adjustments required for deviations, if any to the extent possible, are
made in the CFS and are presented in the same manner as the Companys
separate financial statements except otherwise stated elsewhere in this
schedule. However, since certain subsidiaries/joint ventures which
function in a different countries and have different regulatory
environment, certain accounting policies differ in accordance with GAAP
of the respective countries.
Translation of foreign subsidiary is done in accordance with Accounting
Standard 11 (Revised) The Effects of Changes in Foreign Exchange
Rates" (AS 11). In case of foreign subsidiaries and joint ventures the
financial statements have been translated into Indian rupees. The
Assets and liabilities which are non integral have been translated at
closing rate. The income and expenditure items have been translated at
the average rate for the year. Resulting Exchange difference are
accumulated in the foreign currency translation reserve account until
the disposal of the investment.
In case of foreign subsidiaries which are integral the foreign exchange
transaction is recorded at the rate of exchange prevailing on the date
of transaction. Current assets and liabilities are translated at the
year-end closing rates. The resulting exchange gain/ loss is reflected
in the Profit and Loss Account.
The list of entities included in CFS is mentioned in Note B.1.
(d) FIXED ASSETS:
Fixed assets are stated at cost less accumulated depreciation and
impairment loss if any. Cost comprises the purchase price and any cost,
attributable to bringing the asset to its working condition for its
intended use.
Intangible assets are recognised only if it is probable that the future
economic benefits that are attributable to the asset will flow to the
enterprise and the cost of the asset can be measured reliably. The
intangible assets are recorded at cost and are carried at cost less
accumulated amortisation.
(e) DEPRECIATION AND AMORTISATION:
Depreciation on fixed assets is provided on Straight-Line Method at the
rates and in the manner specified in the Schedule XIV of the Indian
Companies Act, 1956, except,
i) Certain items of plant and machinery (including computers) installed
at and used for institutional projects, and certain training centres
which are depreciated over the number of years till the completion of
the period of the contract when the assets are transferred to those
parties.
ii) Vehicles purchased under the "Own Your Car" (OYC) scheme for the
employees, which are depreciated over the period of the scheme.
iii) Goodwill arising on acquisition of business unit is amortised over
a period of ten years.
iv) Depreciation on Buildings, Computer Hardware, Software, Courseware
and Furniture and Fixtures acquired on or after 1st January, 2006 is
provided at the following higher rates based on its estimated useful
life -
Office Premises 3.33%
Furniture and fixtures 20.00%
Computers Hardware, Software and Courseware 33.33%
v) Depreciation on furniture and fixtures, which are installed at
leasehold premises, are amortised over lease period.
vi) Depreciation on the fixed assets added/disposed off/discarded
during the year has been provided on pro-rata basis with reference to
the date of addition/disposition/discardation.
vii) Assets purchased during the year whose acquisition cost is Rs.
5,000 or less are depreciated fully in the month of purchase.
viii) The method and rates of depreciation of some of the foreign
entities are different from that of the Company.
(f) IMPAIRMENT OF FIXED ASSETS:
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal/external
factors. An asset is treated as impaired when the carrying cost of the
assets exceed its recoverable value. An impairment loss, if any, is
charged to the Profit and Loss Account in the year, in which an asset
is identified as impaired. Reversal of impairment losses recognised in
prior years is recorded when there is an indication that the impairment
losses recognised for the assets no longer exist or have decreased.
(g) BORROWING COSTS:
Borrowing costs directly attributable to the acquisition, construction
or production of a qualifying asset that necessarily takes a
substantial period of time to get ready for its intended use or sale
are capitalised as part of the cost of the respective asset. All other
borrowing costs are charged to Profit and Loss Account in the period
they occur. Borrowing costs consist of interest and other costs that an
entity incurs in connection with the borrowing of funds.
(h) FOREIGN CURRENCY TRANSACTIONS:
Transactions in foreign currency are recorded at the rate of exchange
prevailing on the date of transaction. Foreign currency monetary items
are reported using closing rate of exchange at the end of the period.
The resulting exchange gain/loss is reflected in the Profit and Loss
Account. Other non-monetary items, like fixed assets, investments in
equity shares, are carried in terms of historical cost using the
exchange rate at the date of transaction. Premium/discount, in respect
of forward exchange contract is recognised over the life of the
contracts. Profit/Loss on cancellation/renewal of forward exchange
contract is recognised as income/expense for the period.
(i) INVESTMENTS:
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and market/fair value.
Long-term investments are stated at cost. However, provision for
diminution in the value is made to recognise a decline other than
temporary in the value of long-term investments.
(j) INVENTORIES:
Inventory of educational course material is valued at cost or net
realisable value whichever is lower. Cost is determined on Weighted
Average basis.
(k) GOVERNMENT GRANTS:
Government Grants are recognised when there is reasonable assurance
that the same will be received and attaching conditions are complied
with. Revenue grants are recognised in the Profit and Loss Account.
Capital grants relating to specific fixed assets are reduced from the
gross value of the respective fixed assets. Other capital grants are
credited to capital reserve.
(I) REVENUE RECOGNITION:
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
i) Training and Education Income
Revenue in respect of training and education services is recognised on
rendering of services, only when it is reasonably certain that the
ultimate collection will be made. The revenue from fixed time contracts
is recognised over the period of contracts. For services rendered
through franchisees only the Companys share of revenue is recognised.
ii) Sale of Education Course Materials
Initial franchise fees are recognized when all material services or
conditions have been substantially rendered or satisfied as follows:
i. The Group has no remaining obligations or intent by Agreement,
practice or law to refund any cash received or to forgive any unpaid
receivables,
ii. the Group has rendered all services stipulated and required in the
franchise agreement, and
iii. no other material conditions or obligations related to the
determination of substantial performance exist. For all periods
presented, these criteria were met upon the opening of the
BJB-Aptech-franchised training centre. Renewal franchise fees are
recognized when the above criteria have been met, which for all periods
presented were met when the renewal agreement became effective. To the
extent these conditions have not been met at the end of the reporting
period, any initial and renewal franchise fees received are deferred
and recognized as revenue in the period in which the conditions have
been satisfied.
Revenue in respect of sale of education course materials is recognised
on delivery of the course materials to the customers.
iii) Dividend
Dividend income is accounted for when the right to receive the payment
is established.
In Case of China JV
Revenue is recognised when all of the following conditions are met:
persuasive evidence of an arrangement exists, delivery has occurred or
services have been rendered, the price is fixed or determinable, and
collectibility is reasonably assured. These criteria as they relate to
each of the following major revenue generating activities are described
below. Revenue is recorded, net of business tax, which is levied on the
Companys revenues generated in the PRC at the rate of 5%.
a) Revenue from Franchise Fee
Franchise fee revenues primarily consist of initial and renewal
franchise fees, marketing and advertising fees, and sale of textbooks
and exam services to franchisees.
Initial and renewal franchise fee revenues
Initial franchise fees are recognised when all material services or
conditions have been substantially rendered or satisfied as follows:
i. the Group has no remaining obligations or intent by Agreement,
practice or law to refund any cash received or to forgive any unpaid
receivables,
ii. the Group has rendered all services stipulated and required in the
franchise agreement, and
iii. no other material conditions or obligations related to the
determination of substantial performance exist. For all periods
presented, these criteria were met upon the opening of the
BJB-Aptech-franchised training centre. Renewal franchise fees are
recognised when the above criteria have been met, which for all periods
presented were met when the renewal agreement became effective. To the
extent these conditions have not been met at the end of the reporting
period, any initial and renewal franchise fees received are deferred
and recognised as revenue in the period in which the conditions have
been satisfied.
b) Area Agent Fee
The Group grants third-party sales agents the exclusive right to sell
the Groups instructor training services and related instructor
materials, textbooks and exam services to vocational schools,
universities and colleges in designated
territories for a contractually specified period of time, normally four
to five years, and in return, the sales agents pay a non-refundable
fee. The fee is deferred and recognised as revenue ratably on a
straight-line basis over the period of the agreement.
c) Marketing and Advertising Fees
Beginning 1st January, 2006, franchisees are required to pay a monthly
fee to the Group for marketing and advertising. The monthly fee is
determined at the beginning of the year or upon entering into initial
franchisee agreements for new franchisees during the year. Because the
advertising is directed and controlled entirely at the Groups
discretion, the marketing and advertising fee is recognised as revenue
on a monthly basis when the fee is earned. Costs incurred by the
Company for marketing and advertising are expensed as incurred.
d) Sale of Textbooks and Exam Services
The franchise agreements include terms for the continuing delivery of
textbooks and provision of exam services to franchisees. Pursuant to
the franchisee agreement, the Company delivers textbooks and provides
exam services on a per enrolled student basis for which franchisees pay
the Company a percentage of tuition fees, textbook fees and exam fees
received from each enrolled student. The Company receives payment prior
to the start of each course. Textbooks are delivered to the
franchisees at the start of the course and exam services, which include
organisation, proctoring, grading of exams, and the issuance of
certificates of completion to students who pass the exam, are provided
at the end of the course. Revenue allocated to exam services is
deferred and recognised upon completion of the exam services. Revenue
allocated to exam services is determined based upon the separate
selling price the Company sells exam services to franchisees whose
enrolled students apply for taking the exam without taking the relevant
training for the course. The remaining portion of total cash collected
at the beginning of each course is allocated to the sale of textbooks
for which revenue is recognised when the textbooks are delivered, which
is when risks and rewards of ownership have been transferred. To the
extent textbooks have not been delivered or exam services have not been
rendered, any fees received are deferred and recognised as revenue in
the period in which textbooks are delivered or exam services are
rendered. Under the Companys agreements with franchisees, textbooks
are considered delivered when they reach the franchisees location and
are accepted by franchisees.
(iv) Interest
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
(m) RETIREMENT BENEFITS:
Defined Contribution Plan
The Group makes defined contribution to Provident Fund and
Superannuation Scheme which are recognised in the Profit and Loss
Account on accrual basis.
Defined Benefit Plan
The Groups liabilities under Payment of Gratuity Act (funded) and
long-term compensated absences are determined on the basis of actuarial
valuation made at the end of each financial period using the projected
unit credit method except for short-term compensated absences, which
are provided on estimates. Actuarial gain and losses are recognised
immediately in the statement of Profit and Loss Account as income or
expenses. Obligation is measured at the present value of estimated
future cash flows jsing the discounted rate that is determined by
reference to market yields at the Balance Sheet date on government
bonds where the currency and terms of the government bonds are
consistent with the currency and estimated terms of the defined benefit
obligation.
(n) DERIVATIVE INSTRUMENTS:
As per the ICAI Announcement, accounting for derivative contracts,
other than those covered under AS-11, are marked to market on a
portfolio basis, and the net loss after considering the offsetting
effect on the underlying hedge item is charged to the Profit and Loss
Account. Net gains are ignored.
(o) EMPLOYEES STOCK OPTION PLAN (ESOP):
The stock options granted are accounted for as per the accounting
treatment prescribed by Employee Stock Option Scheme and Employee Stock
Purchase Guidelines,1999, issued by Securities and Exchange Board of
India, whereby the intrinsic value of the option is recognized as
deferred employee compensation. The deferred employee compensation is
charged to Profit and Loss Account on straight line basis over the
vesting period of the option. The options that lapse are reversed by a
credit to employee compensation expense, to the extent of the amortised
portion of value of lapsed portion. The costs incurred on account of
ESOP granted to employees of subsidiary companies are recovered from
the subsidiaries. The Employee Stock Option Account, net of any
unamortised deferred employee compensation is shown separately as part
of reserves.
(p) INCOME TAX:
Tax expense comprises of current and deferred tax.
Provision for current tax is made on the basis of estimated taxable
income for the current accounting year in accordance with the Income
Tax Act, 1961.
The Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the Balance Sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognised only to the extent
that there is reasonable certainty that sufficient future taxable
income will be available against which such deferred tax assets can be
realised. In situations where the Company has unabsorbed depreciation
or carry forward tax losses, all deferred tax assets are recognised
only if there is virtual certainty supported by convincing evidence
that they can be realised against future taxable profits. Deferred tax
assets in case of China operations are recognised at appropriate tax
rates based on reasonable certainty.
At each Balance Sheet date the Companies in the Group re-assesses
unrecognised deferred tax assets. It recognises unrecognised deferred
tax assets to the extent that it has become reasonably certain or
virtually certain, as the case may be that sufficient future taxable
income will be available against which such deferred tax assets can be
realised.
The carrying amount of deferred tax assets are reviewed at each Balance
Sheet date. The Companies in the Group writes-down the carrying amount
of a deferred tax asset to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that sufficient
future taxable income will be available against which deferred tax
asset can be realised. Any such write- down is reversed to the extent
that it becomes reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available.
MAT credit is recognised as an asset only when and to the extent there
is convincing evidence that the Companies in the Group will pay normal
income tax during the specified period. In the year in which the
Minimum Alternative Tax (MAT) credit becomes eligible to be recognised
as an asset in accordance with the recommendations contained in
Guidance Note issued by the Institute of Chartered Accountants of
India, the said asset is created by way of a credit to the Profit and
Loss Account and shown as MAT Credit Entitlement. The Companies in the
Group reviews the same at each Balance Sheet date and writes down the
carrying amount of MAT Credit Entitlement to the extent there is no
longer convincing evidence to the effect that Company will pay normal
Income Tax during the specified period.
In Case of China JV
Income taxes are accounted for under the asset and liability method.
Deferred income tax assets and liabilities are recognised for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities
and their respective tax bases and any operating loss and tax credit
carry forwards. Deferred income tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
periods in which those temporary differences are expected to be
recovered or settled. The effect on deferred income tax assets and
liabilities of a change in tax rates or tax laws is recognised in the
consolidated statements of income in the period the change in tax rates
or tax laws is enacted. A valuation allowance is provided to reduce the
carrying amount of deferred income tax assets if it is considered more
likely than not that some portion or all of the deferred income tax
assets will not be realised.
On 1st January, 2007, the Company adopted Financial Accounting
Standards Board ("FASB") Interpretation No. 48, Accounting for
Uncertainty in Income Taxes à an Interpretation of FASB Statement No.
109 ("FIN 48"). FIN 48 clarifies the accounting for uncertain tax
positions. This interpretation requires that an entity recognises in
the consolidated financial statements the impact of a tax position, if
that position is more likely than not of being sustained upon
examination, based on the technical merits of the position. Recognised
income tax positions are measured at the largest amount that is greater
than 50% likely of being realised. Changes in recognition or
measurement are reflected in the period in which the change in judgment
occurs. The initial adoption of FIN 48 did not have any impact on the
Companys consolidated financial position or results of operations. The
Company has elected to classify interest and penalties related to
unrecognised tax benefits, if and when required, as part of income tax
expense in the consolidated statements of income.
(q) SEGMENT REPORTING POLICIES:
Identification of Segments
The Groups operating businesses are organised and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Group operate.
Inter segment Transfers
The Group generally accounts for inter-segment sales and transfers as
if the sales or transfers were to third parties at current market
prices.
Allocation of Common Costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated Items
Includes general corporate income and expense items which are not
allocated to any business segment.
Segment Policies
The Group prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Group as a whole.
(r) EARNINGS PER SHARE:
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
(s) OPERATING LEASE:
Leases, where significant portion of risk and reward of ownership are
retained by the Lessor, are classified as Operating Leases and lease
rentals thereon are charged to the Profit and Loss Account as per terms
of lease agreement.
(t) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
A provision is recognised when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted to
its present value and are determined based on best estimate required to
settle the obligation at the Balance Sheet date.
Reimbursement expected in respect of expenditure required to settle a
provision is recognised only when it is virtually certain that the
reimbursement will be received.
Contingent liabilities are possible but not probable obligations as on
the Balance Sheet date, based on the available evidence.
Department appeals, in respect of cases won by the Company, are also
considered as contingent liabilities.
Contingent Assets are neither recognised, nor disclosed.
Provisions, Contingent Liabilities and Contingent Assets are reviewed
at each Balance Sheet date.
(u) FAIR VALUE MEASUREMENTS:
In case of China JV
On 1st January, 2008, the Company adopted the provisions of FASB
Statement No. 157, Fair Value Measurements, for fair value measurements
of financial assets and financial liabilities and for fair value
measurements of non-financial items that are recognised or disclosed at
fair value in the financial statements on a recurring basis. Statement
157 defines fair value as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. Statement 157 also
establishes a framework for measuring fair value and expands
disclosures about fair value measurements. On 1st January, 2009, the
Company was required to apply the provisions of Statement 157 to fair
value measurements of non-financial assets and nonfinancial liabilities
that are recognised or disclosed at fair value in the financial
statements on a non-recurring basis. The Company is in the process of
evaluating the impact, if any, of applying these provisions on its
financial position and results of operations. In October 2008, the FASB
issued FASB Staff Position FAS 157-3, Determining the Fair Value of a
Financial Asset When the Market for That Asset is Not Active, which was
effective immediately. FSP FAS 157-3 clarifies the application of
Statement 157 in cases where the market for a financial instrument is
not active and provides an example to illustrate key considerations in
determining fair value in those circumstances. Management has
considered the guidance provided by FSP FAS 157-3 in its determination
of estimated fair values during 2008.